Can Marissa Mayer save Yahoo?

18th July 2012

The latest incumbent is Marissa Mayer, a 37 year old who will shortly be on maternity leave. The appointment is good for diversity but what can Mayer bring to the party that will prevent her having to spend more time with her child as she becomes yet another Yahoo chief executive dismissal in a year or so's time?

At the same time,Tim Armstrong, the chief executive of AOL, another internet blast from the past, has revealed his plans for "resuscitating" the quasi-moribund brand in the Financial Times.

But first technology investors have to find answers to two questions.

Avoiding burnout – the Mayer method

Maybe, she saw herself sidelined by Google chief Larry Page or hitting a brick wall after her 13 years at Google. In April she wrote: "Avoiding burnout isn't about getting three square meals or eight hours of sleep. It's not even necessarily about getting time at home. I have a theory that burnout is about resentment. And you beat it by knowing what it is you're giving up that makes you resentful. I tell people: Find your rhythm. Your rhythm is what matters to you so much that when you miss it you're resentful of your work ."

Mayer will face a heavy burden. She is regarded as a tech rock star. She has been credited with the success of Gmail and Google Earth as well as the home page. But those grew out of the category crunching success of Google itself as a search engine.

What is the incentive now for users to quit Google for Yahoo when they want to search? How will she get countless hundreds of millions across the world to say they are going to "Yahoo" rather than "Google" when they need to find a plumber or that rare part for their 1969 Harley? How will she wean people from Gmail to Yahoo! Mail? Can she claim features so much better that users, notoriously adverse to the problems of email address change, will switch?

Finding the new clever idea

The Yahoo board must know that the clever ideas that form the bedrock of her CV are the result of Google group thought – not individual genius. Yahoo now needs a unique selling proposition, a product so revolutionary that it will knock the opposition out of the ring.

Otherwise how will she reverse the fall in Yahoo's share of online advertising – down from 16 per cent in 2009 to half that now? 

On the plus side, she can still count 700m users but how far can she count on them? Ask anyone who has an account with Yahoo Groups and they are likely to say they use it because they have to, not because they enjoy the experience.

She says: "I look forward to working with the company's dedicated employees to bring innovative products, content and personalised experiences to users and advertisers all around the world."

Share price needs to top $20

Fine words but they could have been said – and perhaps were –  by any of her many predecessors. Success will be when she has been in the job for two years or longer – and the share price tops the $20 mark.

Meanwhile, at AOL, chief executive Tim Armstrong has been touring the news rooms with his message that he can turn the once glittering brand around. He has to deal with scepticism and adverse comparisons with Mayer such as this in the San Francisco Chronicle:

"Yahoo's decision to hire Marissa Mayer is reminiscent of AOL's decision to hire Tim Armstrong.

A big, but dying, internet brand looks to Google for a talented executive to turn it around. Armstrong hasn't fixed AOL, largely because he's investing heavily in local-news operation, Patch. Patch is losing money and it's a drag on the stock and the company overall.

Mayer doesn't have any pet projects like Patch. If you look at her portfolio of startup investments, it's a pretty decent, and eclectic mix of tech companies."

Madison Avenue holds the AOL key

Armstrong knows he has to win back the adfolk on Madison Avenue as well as recover credibility with Wall Street. He has been busy acquiring and one strategy seems to be to relegate the unloved AOL brand and promote the newer names in the stable such as Huffington Post, TechCrunch and Moviefone.

This will be a struggle. Armstrong fought and won a proxy battle against activist investor Starboard Val
ue
last month. He has cut out the vast majority of the 340 brands he inherited in 2009 to concentrate on no more than 20. He is eyeing mobile devices and digital television channels. He is expanding into Asia. And he has the advantage that the AOL leadership is stable – unlike Yahoo's roundabout.

But he has yet to win over investors and – more importantly – to regain a share of the online advertising spend. Traffic to the sites has been falling and, with it, revenue.

This leaves Google as the incumbent market leader with a dominance that none of its rivals can touch. 

The hope for rivals must be that it crumbles internally as those with the company from or near the start fall out with each other. It can, after all, only have one leader.

Mayer's departure might be a sign that all is not well at Google. Or it might be simply her ambition. She does, after all, have the chance to prove she can walk on the Yahoo water where so many others have failed and produce the miracle investors so badly need.

 

More on Mindful Money:

Is Larry Page the new Kim Dotcom?

The UK's innovation 'crisis'

What will the Top 10 companies be in 2050?

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