Mayer’s Product Conundrum

Yahoo's engineers haven't delivered what advertisers want

The Yahoo CEO job was never going to be easy. And as the initial excitement over the hiring of longtime Google executive Marissa Mayer wanes, the challenges facing the company haven't. 

Among her many priorities, the newly christened chief executive must immediately grapple with two skeptical constituencies: advertisers who've lost enthusiasm for and faith in Yahoo's ad products, and engineers who worry that Yahoo's innovative days are behind it. There's also doubts about whether a product-oriented CEO is the right hire for a company built primarly on advertising.

One former Yahoo executive said hiring Mayer shows how disconnected Yahoo’s board is from the core of the company's revenue business, advertising. “I think the appointment is a big swing but just as a much a lurch as many of the past [Yahoo] board decisions,” the exec said. 

“We’re in the business of advertising and advertising is a perception business," said 360i CEO Bryan Wiener. "If the perception is you’re not exciting, you’re not going to get your share of advertising. … The community has been so underexcited about Yahoo for so long they’re not getting their fair share, and they only have themselves to blame.”

Wiener believes it’s too early to make a definitive assessment on Mayer, since she's spent her career at Google, which built a huge business on advertising despite being so product-centric. "She understands the challenges associated with balancing product and media,” he said.

Given Yahoo's 700 million monthy users, Madison Avenue will likely never abandon the portal. And as Yahoo reported during its earnings call on Tuesday, global visitors to Yahoo properties were actually up 1 percent year over year for the second quarter, and media properties’ pageviews rose by 5 percent. That provides Mayer with something of a cushion.

“To me [the user engagement numbers] speak to the audience is still pretty engaged,” said Adam Shlachter’s, managing partner and digital practice lead at media agency network MEC.

But for how long will users stay “still pretty engaged?” According to comScore, last year the amount of time spent on social networking sites trailed time spent on portals by just a tenth of a percent, and Facebook alone accounted for 14.6 percent of all time spent online versus 8.6 percent for Yahoo sites.

And it’s not just users getting bored by what Yahoo’s bringing to the table. Shlachter’s echoed many other industry leaders in asserting that Yahoo has fallen from being one of the Web’s dominant players to “just being one of many different options today, and I don’t know how quickly [Mayer] can change that or if the intent’s going to be to get them back to being a go-to option.”

Of course, Mayer’s been on the job for only a few days and hasn’t really laid out her vision for Yahoo. Smart, especially considering the flak former Yahoo chief executive Scott Thompson received for saying he didn’t really understand media or advertising. “I think her opening statement on what she plans to do is going to be enormously important. I don’t think you can take the job of Yahoo in the state that Yahoo is in and say, ‘I’m going to take 60 to 90 days and figure it out,’ ” said Wiener.

The vision Wiener hopes to hear from Mayer would involve innovating around big breakthrough ad units, and Shlachter’s agreed that product innovation—be it consumer or ad focused—is where the company can find growth. “If she can improve that consumer experience as well the data that fuels the ad experience, maybe that helps create some impact and some change,” Shlachter’s said.

So clearly, buyers want better ad offerings from Yahoo. On the consumer side of things, it’s not that Yahoo has shied away from rolling out new products with new ad opportunities. It's just that the company has struggled to find a winner. The jury’s still out on the Axis search browser launched in May, but Flipboard competitor Livestand got the axe less than seven months after launching the highly touted iPad app.

One move Mayer could make to bolster innovation at Yahoo would be to adopt something similar to Google’s famed 20-percent time philosophy (the company famously encourages engineers to devote 20 percent of their time to pet projects). But that requires a certain type of engineer, argued one former Yahoo product manager. A type of engineer that the company is lacking.

“Yahoo’s is a culture that doesn’t take risks," said the former product manager. "People are petrified of doing anything that can put their jobs in jeopardy. They don’t want to get fired; they sit in their cubes and they’re very happy there,” he said.

B. Riley analyst Sameet Sinha told Adweek on Monday that Mayer is the type of person who could reverse Yahoo’s talent drain and attract top engineers. However, according to the former Yahoo product manager, ”those types of people are now running their own companies or are really senior people at other companies in a really healthy shape. Maybe Mayer’s pitch to prospective employees shouldn’t be “Let’s save Yahoo.” Maybe it should be “Let’s launch a massive startup.”

The engineer's final piece of advice for Mayer: "Rebuild the entire thing.”