Google vs. Yahoo

Why the search engine market needs a fuel-check

In the same week that Google reveals plans to launch a system that will allow publishers to charge for content, executive business channel MeetTheBoss.tv sits down with Yahoo’s Jeff Russakow, EVP of Customer Advocacy, to discuss consumer satisfaction and engagement - and how to monetize for the web.

According to reports revealed at the end of last week by Italian newspaper La Repubblica, Google will later this year launch an integrated payment system that allows publishers to use a single infrastructure for web, mobile and tablet to monetise their content.

The news comes hot on the heels of moves by News Corporation to buy the 61 percent of BSkyB that it doesn’t already own, bringing the pay-TV operator completely into the fold: this, too, is matched by News International’s (News Corp’s main UK subsidiary) to place its newspapers behind paywalls and begin charging online users to access their pages.

As such, the paywall debate is raging. The battle for online market share is raging too.

‘Reach is not enough’

For Yahoo, which currently reaches 600 million users worldwide, current plans to develop mobile apps to reach the 1.5 billion-strong handset market suggests there is still potential to reach a huge audience: but, even with Eastern Europe, the Middle East and Southeast Asia offering 500 million new users to the market place in the next five years, reach just isn’t enough.

“The first thing [to remember] is the good-old fashioned advertising model that says the internet is still in its early days and there’s a lot more money to come over,” explains Russakow in the exclusive interview with MeetTheBoss.tv. “Somewhere between 10, 11, 12 percent of total advertising is spent on online advertising and yet somewhere between 30 and 35 percent of consumer minutes are now spent online every night.”

The issue is that online advertising is basically now rivaling television; and has long passed and blown out print media or radio in terms of where the consumers are spending their time. It’s a little like Mad Men – only on acid.

“Outside of that,” proffers Russakow, “there is no question that the historical ideas of monetization online and the advertising monetization model as the only model have clearly been turned upside down.”

Eyeballs and engagement

Russakow points to Google as a reference, sighting how the search engine giant currently has about 180 minutes per user, per month; accounting for $25 per user, per year. “If you look at Facebook” adds Russakow, “they’re almost twice that.” In fact, Facebook currently sees 280 minutes per user per month, however, they’re only making $1 per customer per year. That’s a 25 times difference.

“Part of it, I’m sure, is that Facebook will close that gap by focusing on monetization,” suggest Russakow. “But the historical idea that eyeballs and engagement equals monetization is clearly not true anymore. You've got search; you've got display; you have listings; you have social and more and more, as people are moving to mobile devices, we’re seeing subscription models; people moving to content, apps, loyalty programs. As a result a lot of the monetization models that have existed in media for a long time are now starting to come to bear fruit online.”

Less is more

That’s all well and good. In short, Facebook could be a killer if only it could monetize successfully – only it doesn’t. But what for Yahoo specifically: has Google got the search market all sown up?

Russakow, perhaps obviously, says not. Yahoo economics are simply, he explains to MeetTheBosstv’s Jonathan Spragg; and Russakow is aiming to delver more, with less.

Already in the throes of an impressive cultural overhaul, Yahoo’s new CEO Carol Bartz has called Russakow a “transformational leader”. She says, “We need to do a better job of listening to Yahoo!’s users and advertisers and incorporating their feedback into our products and processes. In this critical role, Jeff will be instrumental in developing initiatives to improve customer satisfaction and loyalty, and he’ll ensure that we’re laser-focused on the needs of all our users and advertisers at every level of our company.”

Yahoo already has 600 million users - now with Microsoft as a partner, a colossal advertising budget and Russakow to boot: the market place could be shifting gear.

To see the interview in full, please go to MeetTheBoss.tv