Yahoo Plans To Weave New Social Network
David Filo, like nearly 200 million other people across the planet, has a Facebook account. But as co-founder of Yahoo, Mr. Filo is looking to revolutionize and expand the way people communicate online.
In a strategy to invigorate company growth and increase the interconnectivity Yahoo’s numerous online properties, Filo and new CEO Carol Bartz want to make many of the social networking capabilities pioneered by Facebook and MySpace available to users of their various websites. If their plan succeeds, users of these diverse websites will be able to network with each other without even needing a Facebook account.
The simple idea behind the plan is to open the lines of communication between the diverse Yahoo communities and to get users of particular sites to explore other areas of Yahoo that they may not have been familiar with.
“You start to introduce Yahoo users to other parts of Yahoo”, said Filo.Â
With giants like Facebook and MySpace dominating the social networking market for years now, it’s hard to predict whether or not Yahoo’s plans will catch-on with customers or not. But rest assured that marketing directors and advertising executives across the world will be keeping a close eye on the project.
According to JMP Securities analyst Sameet Sinha, “people are spending time on Twitter and Facebook, but advertisers don’t want to be there right now. That’s the big issue.” But Yahoo is different, Sinha says, because they already have a strong advertising clientele.
ROOM TO GROW
With websites as diverse as fantasy sport leagues, celebrity gossip forums and financial advice sites, Yahoo has a lot of options for experimenting with and expanding user interconnectivity. Yahoo claims that on average more than 50% of their users only visit one to a few of their websites.Â
Yahoo has timed the introduction of their new social networking features to correspond with the release of new versions of Yahoo Mail and a new Yahoo home page. Some of the first social capabilities will include a common user profile, lists of online friends and regular updates on the activities of friends.
Users of the version will get an update alert whenever online friends recommend a Yahoo news story, upload a picture on Flickr or trade a player in fantasy league baseball. New technology to send and receive roughly a hundred different kinds of similar updates between online friends is currently in the works.
For the month of February online research company comScore reported that Yahoo had almost 330 million unique visits to their homepage and more than 280 million to Yahoo Mail, making them one of the most popular and valuable internet properties in the world.
Another reason for Yahoo’s expansion into the social networking market may be to attempt to compensate for their failure to grow revenues for their internet search engine. Despite repeated efforts to revamp their search engine, Yahoo has been unable to get out of the shadow of internet search giant Google Inc. to reclaim any significant share of that market. Yahoo’s venture into the realm of social networking may offer them new venues in which to expand and make up for stalled growth in other areas.
A DIFFICULT ROAD AHEAD
Make no mistake though. Yahoo’s plans to wedge themselves into the social networking market will be no cakewalk. Yahoo has a number of various projects to manage and a lot of competitors eager to join in the game as well.
Yahoo’s intended expansion comes at a time when numerous large media conglomerates have started to take notice of the potential profitability of online social networking. Media was all abuzz last week over unconfirmed rumors that Google was looking into purchasing the microblogging service Twitter.
While plans to make the internet company more social were not her own, Bartz has certainly made it a top priority since she’s been the new CEO at Yahoo.
“She really instilled a sense of urgency that this is critical to our success going forward,” says Yahoo’s VP of Social Platforms, Neal Sample.
Bartz has helped to expand the scope of the social project as well as to divert resources to it from less profitable areas of the company.
Yahoo also anticipates that the stream of news updates will gradually begin to include websites that are not necessarily affiliated with Yahoo. The next version of Yahoo Mail will allow outside software applications to create social capabilities that go beyond basic news updates.
Investors hope that Bartz’ bold management style and her efforts to reorganizing the company will help the new social project to overcome problems of under-performance that have plagued the company in recent years.
Yahoo’s greatest challenge is perhaps to figure-out how to get desirable information to their users without overwhelming them. It may prove particularly difficult to convince their users of the novelty and usefulness of their new services when most of them may already be using Facebook or MySpace.
Leadership at Yahoo seems confident about their plans. The test, however, will be whether they can convince both users and investors that what they’re doing is worthwhile. With fierce competition in both the business market and the market of ideas, confidence alone won’t do the trick.
Image Courtesy UPI
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