Analysts: You Can’t Compare Yahoo to Google

On Tuesday, the news hit the wire: Yahoo had finally shaken up its
corporate structure. COO Dan Rosensweig was out, CFO Susan Decker
moved over, and the search began for a leader who can help Yahoo
develop products and keep, engage, and grow its audience.

Almost immediately, industry watchers began calling the shake-up a result of Yahoo’s competition with

It’s true Yahoo runs a search engine business that competes with
Google for searchers and advertising dollars.

And it’s true Google regularly trounces Yahoo in the search
engine and search marketing business, whether the score is kept by revenue dollars or market share.

But in the wake of Yahoo’s shake-up, at least a few contrarians are
wondering what the bigger problem for the company is: its competition
with Google or the fact that no one seems to understand how little
Yahoo’s core business competes with Google’s core business.

“Part of the problem, which isn’t really a problem except that they
are a public company, is that they’re compared to Google and they’re
not really in the same business,” JupiterKagan analyst David Card

Google is a search engine. Yahoo is a portal with a search engine
product, Card said.

But it’s only one product among many, and, overall, he said, the
company is in a “good position.”

“They have a big, broad, loyal, general-purpose audience. They can
slice and dice that audience up into pieces. They have a rich
advertising platform and because they can do search, they can do
video and they can do sponsorships, they can deliver different kinds
of marketing messages in different kinds of context.

“That’s not a bad place to be.”

Numbers from Hitwise Market Research confirm Card’s assessment. In
the market share of visits for the week ending December 2, Yahoo
ranked first in business information sites, first in e-mail, second
in maps and first in news.

By comparison, Google ranked 21st,
fifth, third, and sixth, respectively.

The good news for Yahoo, Forrester Research Analyst Charlene Li wrote
on her blog, is that the company’s reorganization resulted in a
mission statement, “to connect people to their passions, their
communities, and the world’s knowledge,” that de-emphasizes its
search competition with Google.

“I really like this because it puts ‘people’ at the center of
Yahoo!’s strategy. Compare this to Google’s mission ‘to organize the
world’s information” and you get an idea of each company’s battle
plan,'” Li wrote.

The people at the center of Yahoo’s strategy are its audience, of
course, and Card agreed that they are the company’s most valuable asset.

It’s also one that Google, no matter its growth, isn’t really
trying to steal.

While Yahoo publishes content on topics ranging from
sports to food, Google characterizes itself as a switchboard. A
Google spokesperson even confirmed that the company doesn’t want or
need users to stick around on its site; it wants the users to find
relevant search results or sponsored links that lead off the site.

This doesn’t mean Yahoo’s core business doesn’t face
competition for that audience. That’s coming from Internet
properties that have little to do with search, such as
MySpace, Facebook, ESPN, MSN or AOL. In other words, it’s coming from content producers and platforms whose goals are to keep users around as long as possible, looking at the brand advertising.

In particular, Yahoo should be wary of social networks, Card said.

“The social properties are stealing a lot of the buzz because a lot
of marketers are intrigued if not spending a lot of money them yet.”

But, despite that challenge, a competition with a bunch of buzz-stealing upstarts remains much different than a competition with
Google over search.

Advertising revenue went up 30 percent across the Internet in 2005 so
there’s plenty of new business to go around. A reorganized and
refocused Yahoo should get its share, Card said.

“They’re in a good position. If this reorganization helps them make
better decisions faster and implement them faster, then they should
be in a good shape.”

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