It’s Yahoo Investor Day, where Yahoo is briefing institutional investors and financial analysts on the company. I’m here for the morning portion, and I’ll be live blogging out of it. You can also watch the live web cast here.

Bartz Welcomes

Carol Bartz, CEO, on stage. Saying thing they have great opportunity. Lots to fix. Low return. “Today is the journey back to respect. We’re not here to wow you, but we’re here to intrigue you and earn your respect.”

What happened? Yahoo was the big shining star, then wasn’t. Wants to talk of “slice” of Yahoo that’s not search or display or clicks or CPM that but “the scale of what Yahoo is. The importance … the real intensity of what Yahoo is.”

To define what Yahoo is, they went out to talk to users around the world in 10 countries. “And they were kind of confused and said what’s Yahoo.” Said it was where they go to check in … it’s the combination of my world and the world [OK, we know they didn't say it that way." Says sure, they go to Facebook and elsewhere. "But guess what? They come home. They come home to Yahoo ... that's scale no one else has. That's diversity no one else has."

Something about advertisers. Didn't catch it because apparently you can't video what's being live webcast. As someone who came over to tell me. So couldn't hear her.

"We can run a more complex business because we're so huge." "We are the largest communications engine in the world." [first time I've heard "communications engine" phrase and like it. Finally, she's defining Yahoo in a way that would fit in a Twitter box.

So Yahoo has scale. And fallen flat on its face at times, "Sure." But they learn by that.

"Carol who's your competition? Who should we compare you to." Sport analysts look at ESPN; entertainment folks look at TMZ. Apparently no one compares them to Google or she's not saying. "We make up every morning with passion to beat every one of them ... and we usually do .. we're not a search company. we're not a display company. we're a broadbased internet [something, communication?] company … that is awesome.”

Yahoo also had diversity. And now she’s lining up three “labs” speaker to come. They’re amazing.

Yahoo has great editorial, human brains, combine great human editorial with great machine learning. So that makes us unique.

Sales force also makes them unique. Yahoo a “high touch” company.

The last thing that makes us unique is that we have fallen, and we really want to get back up. Up on our tippy toes … if you haven’t had good times and bad times, you don’t know what you’re doing. We’ve had good times and bad times. We prefer the good times [chuckles in room]” Going to get back to that.

Not here to make big promises. We’re here to impress you … about how we innovate, our scale.

Thanks everyone and brings up Ari Balogh, Yahoo CTO.

Balogh

Brands matter. Large brands are being found to be more important between 2003 to 2009. There’s a pie chart to prove this. Yahoo’s a big brand, so they have opportunity.

Another chart showing how time online has grown. I don’t dare take a picture of it, though. Email up 18% since 2003, search up 12%, video up 63%.

A bar chart of mobile internet users since 2008. 490 million worldwide to 596 now to 1,453 million projected in 2010 from comScore and eMarketer. No mention if they’ll all be using Android, but the Kindle gets a call out.

Other big trend is how traditional silos are changing. Talks about Yahoo Buzz now. Place to find stuff. You can search. Is Twitter real time search [with tone that no, it's not]. YouTube, video or search? The point is that it’s really about personal social utility. I think we’re being told don’t worry about all those real time search deals. See, we kind of have it in Yahoo Buzz.

Now Yahoo’s [OK, Yahoo!'s] Value Proposition. There’s a flow chart, but we’re on to a page on Buzz about the Chupacabra monster being caught? That was an awesome X Files. C’mon you remember it. Kids, the X Files was a TV show with Hank Moody from Californication and Scully, who like lives in England now. But I digress…

A Yahoo editor ssaw this story and decided to put it on the home page because it was unique enough. And it takes a small village to make that sort of thing happen [which seems a village too much]. “The results were impressive.” 15 million people read it, 30,000 votes, 2,000 comments, 700,000 searches. “This drove engagement downstream in Yahoo.” [and did the site pay for the placement, I wonder? Because if so, it drove some direct revenue. But it might have been a pure editorial pick].

So Yahoo does this day after day, content across multiple platforms. No other company can combine that great technology with the right voice. Yahoo creates “well lit contexts” for advertisers to connect with their audience.

Yahoo learns more and more about how people behave and how they can sell different segments to advertisers.

Yahoo execution strategy starts with deep personal relevance. Generates “insights at scale” that improve experience with people and advertiser.

Now Tapan Bhat, Senior Vice President, Integrated Consumer Experiences, comes to talk about the new Yahoo  home page.

Yahoo’s Home Page

345 million visitors worldwide and other big numbers I didn’t catch. Wanted new home page to give best of web to grow audience, giving search. The whole my world and the world thing.

Talking about how as entered counties, they build different ones and ended up with 44 different pages based on 30 different coding [or close to that]. Point is, lots of cost, especially as something always tested on the home page, so has to be implemented after a reaction in market A, then add to market B could take a year to fully roll out and improve the user experience everywhere. “And that’s dumb.”

Talking “page yield” concept, what’s value of the traffic a page sends, how much people come back, testing how to improve page yield. Again, takes another year to roll something that works in one market out further. New platform means an immediate worldwide rollout. Great value there.

End 2010, 33 different code bases will be down to 1.

My Favorites section of home page now My Applications, as part of first version. And other changes, and people we’re overwhelmed. Not emotional reaction Yahoo wanted. But turns out, the color wasn’t what people expected. So lighted the blue. “You’d be surprised. Immediately we saw a change in the metrics.”

Created the My Mailboxes area that can bring everything into one place. People weren’t using it, though. People wanted the mail boxes accessible through Yahoo but separate (Yahoo Mail separate from AOL Mail separate from Gmail, not them all flowing into one box).

Talking about common inbox, elevating messages from those most important in your lives (which Gina Trapani wants, so either Yahoo hasn’t convinced her or need to do more outreach!).

“Is the home page done? No, the home page is never done .. when we get to a threshold, it’s what’s next?”

Showing a hover preview as you scrolled down your apps, say you hover over your Flickr link on the home page, see a preview. People complained about “pop-ups.” Turns out people read by navigating with their mice. They move the mouse over to text to help them read. So if you put an overlay that shows up, “disconcerting for them.” So changed the delay between when you hover over a link and get an overlay from 150 milliseconds to 450 millisecond and had a big impact.

Search! “The biggest driver of page yield is search.” Search queries monetize at a high rate. Navigation and search is a core need. So tweaked with the search box. Made the button said “web search.” Made the button bigger and the search box bigger. “We sat people down, and they said, ‘Where’s search’?” [But uh oh, they'll find it much easier over at Google and Bing].

Turns out highlight web search box also highlighted other things [didn't catch them, maybe the other search verticles like Images and Video].

Looked at page width on how drove search. We came to this realization that less is more. When you have less on the page, the things that are left matter more. So home page, went to a “short” home page. But people expected search to be a “fundamental” part of what they do online. So redesigned search page.

Trying to have a more relevant experience there. Talking about Yahoo’s new filters (see also here) and how you can search and then get to places like Hulu (and now you can get to Google!)

How’s home page going? 9% increase in page views, 20% increase in time spent. What’s causing this? Ability to add applications from any site on the web and featured content. [Yahoo's got an app for that. Well, a place for you to park your app. Oh, I've got it. The new slogan. Yahoo: Your iPhone For the Web].

Yahoo’s got a content optimization engine that gets it to the “right user and the right time” [man, I hate any catchprase that talks about right blah at the right whatever. Like doing the right thing is a given, not a selling point. Doing more than right, that's a selling point].

Speaking of selling, came up with way to sell ads in the overlays you get when you click on something in your favorites. Also sells applications as something people can add to their favorites.

Bryan Lamkin now comes up.

Bryan manages the applications group. Apps drive engagement. Mail up compared to MSN or Gmail. 100 billion messages received in Yahoo Mail per month. 81+ billion instant messages sent each month. 4+ billion photos uploaded to Flickr. Yahoo Answers has 30 million question and answers posted each month [we'll sometimes the answers don't really answer, but still, Yahoo Answers has lots of goodness there]. Yahoo Groups has 120 million members.

Lots of handset / mobile growth. So bringing mail experience to more phones. Mail and messaging are number one apps people want. Flickr app now one of the most popular social apps on iPhone [and took Yahoo long enough to roll it out]. Many who have messenger on their phones never used it on the desktop [looking for ways to save on text messaging costs in a down economy, eh?].

Talking of cutting spam in inboxes. Need people have for someone to do trusted filtering. “We deliver more photos via mail in a week than get posted on Facebook in a month”

Talking about smart inbox that elevates messages from those you care about. [Precisely what tech blogger Gina Trapani wants. So Yahoo hasn't convinced her or needs to do more outreach!].

Lots on how you can do things like view your photos in mail, interact with Yahoo Groups, watch your Netflix download in mail. [Mail, your desktop for the world!].

Yahoo Mail represents 84% of Yahoo’s logged in users. And logged in users in general far more engaged on Yahoo.

James Pitaro now up.

Media Business

James telling story about how he didn’t wear a tie to meet the NBA commissioner with Carol. She told him, “where’s your tie.” He’s like Yahoo doesn’t roll that way. Met the commissioner who said, “where’s your tie?” He thought the was being Punked. Point? See Yahoo’s learning [he's wearing a tie on stage].

What’s Yahoo Media? News, Sports, Finances, Games — these properties are those identified as core to users and so core to Yahoo.

Strategy is to grow the products and engagement by delivering premium content by innovative and insightful buzzword buzzword. And something about relevancy.

Sept, had 80 million unique users, #1 in lots of verticals areas. “When Life Happens, People Come To Yahoo.” text on slide behind him.

News hits, people come to Yahoo. Both breaking news and Yahoo Finance up as, well, people’s finances are down. The down economy ironically has generated biggest audience ever for a financial site. Michael Jackson’s death, well, let’s say Yahoo did well in page views by it.

Search used to figure out what content is needed.

Talks about the guy who caught a baseball and gave it to his daughter who threw it back by mistake [it was really sweet]. Build a blog around it. More traffic.

Yahoo also has original news content. So other news organization take them seriously [though oddly don't seem to mind that Yahoo then competes with them, I guess].

They produce their own video. [and i'm having serious connectivity issues, so i won't be keeping up for a bit, sorry] Yahoo’s not going to make sitcoms [phew]

Publishers should look at Yahoo not as a competitor but a partner. Can drive traffic to them. Rising tide, boats go up.

Want exclusives. Get exclusives movie clips for free, which he says is “amazing” but they get lots of traffic. Same with sports clips from leagues.

They”ll never have it all, so they have to be open and link out. Artist pages, you can create your own experience and linked to whatever want. Since launched, engagement and view up. Despite being open. [um, maybe you're also promoting your pages for directly? and being open by linking out by making the users themselves have to do it? let's not go overboard on how giving Yahoo is there. And side point, lots of talk about licensing. Those licenses, which is something Google doesn't do because it doesn't use content so extensively, are still what help keep lots of media companies loving Yahoo and hating Google].

Dunkin Donuts partnered to do a mornign sports minutes. Fantasy Football Nation helped bring sports scores for free to Yahoo’s mobile app.

And it’s break time. When we come back …. Search!

Rinse & Repeat / Listen & Learn

Break is over. Had trouble because Carol Bartz was standing in front of my chair in the audience. So I said Carol, get the hell out of my way. And she told me to f-off with a wink. No, no, silly fools. I waited until she left. But that would have been funny. Or maybe I’m a bit tired. You know, the day started pretty early.

Ari is back and talking about scale, iteration, getting feedback. And I’m feeling all buzzwordy, despite liking Ari from earlier (he’s new to Yahoo). How about rinse & repeat? Feedback & Iteration? No, Rinse & Repeat. Or Listen & Learn. OK, maybe I shouldn’t be in charge of catchphrases.

Anyway, Yahoo does lots of “bucket tests” that can involve millions of people. “That generates an amazing amount of data for us. And we learn.”

What’s a petabyte of data [one quadrillon bytes]? What’s that feel like [I don't know, but it sounds terrible, like a pedophile]. Anyway, they’ve got lots of data. And big believers in the cloud. In fact, they were into the cloud before it became a current fad topic [IE Google, we were in the cloud before you, so stop yapping like you're the cloud makers. See, I say these unsaid things. Sometimes I even say them correctly].

Running down the home page, talking about load balancing of apps. Content optimization, studying what works on home page and what to promote. Churning search data to know what popular searches to highlight. Ad optimization [can they optimize that annoying Progressive Direct woman and her ad off the home page?]

“Cloud computing is not some big sexy thing we’re trying to sell out there … it’s how we do business.”

“We bring science, and we move science forward” to the changes they make. “Computational advertising” is bringing science of trends to it.

Search

Now we’ve got Prabhakar Raghavan who heads Yahoo Research.

Search is a virtuous cycle. How users use search to get across the Yahoo network and what do they do to get back to Yahoo search. And how does the underlying technology play.

“We’ve gotten awfully good to develop search technology just for search.” But how can it be used to enhance user experience elsewhere, such as on the home page.

Talking about the 10 blue links experience [kaching! more money for former Ask CEO Jim Lanzone who never gets credited for popularizing this term].

Users want more than that. He contends people don’t want to search. “People don’t get home and say let me run some searches.” They want to figure out where to eat dinner, to find an apartment, accomplish other tasks. But search paradigm forces people away from act of doing things to having to do research.

Looking now at Brett Favre on Yahoo, showing a smart box with incomprehensive football stats to me [because I'm a football moron -- if you love football, you probably love this]. In fact, it’s showing the exact stuff like next game, injury status and other stuff people typically search for. “It’s the kind of the thing in the past that the user would have to go to many places to get … but here it is in one place, on Yahoo.”And good choice of query. Bing and Google have many smart boxes with direct answers on some topics, but nothing for this particular query.

Web of pages versus web of things, he says, and has illustration showing how Yahoo extracted all this information from pages (some licensed; the box doesn’t say source. In fact, the box really draws from Yahoo Sports rather than from the open web of content, as best I can tell).

We have to move away from a web of pages. Crawling the web, that’s like a commodity. Have to lift above that. Which is kind of true but also on target for the overall message that Yahoo doesn’t really need its own expensive search tech but instead can lease from Microsoft.

Looking at current query smart box for Madonna. Now looking at a future [one that still has Madonna, I guess]

It looks nice. The entire page has things like Yahoo News results, video stuff at the top. “no blue links” Bank of America page. Shows latest news at the top, quote results in the middle, blog matches, local results. [and this is all good. but it's also risky, because you might guess wrong. that's main reason folk haven't made this type of deep dive so far. "this isn't your father's search experience. This is the type of thing we have to get really good to deliver in the future.

Content comes from the open web but also licensed [not said, see, we have premium content Google won't have because they don't license. And they can also tell good content within Yahoo's own network based on activity [but worrisome, because you really don't want them doing what Lycos used to do, where you could never escape Lycos when doing a search.]

Showing ideas on integrating instant messaging. Showing how you can maybe email about going to a movie and having results show up next to your email where you can copy movie times over. Which would be handy, I suppose — but I’m pretty sure Bing’s been doing that for about six months now. So it’s not a huge driver.

Wish I had screenshots of some of the mockups. But then, they’re also mockups for now. Let’s get them out there, see how they do.

Testing Testing Testing

Now Yahoo economist Preston McAfree up talking about algorithms and content optimization. Figuring out based on demographic of visitors what they want to see on the Yahoo home page.

This also helped editors get better in learning what stories feed what groups. That they don’t have stories that target particular users. So virtuous cycle — jokes every speaker today required to use that phrase — but does. Says growing recognition that as web gets bigger, editors play an important role. Algorithms are easily gained. If done purely like that, people will design to fool that. And human learning.

Digg, the quitessential place algo is used, he says, has started to use human editors. Surprised he didn’t say Google because that’s sure who this felt aimed at

Talking how putting a second ad below the first search ad at top of results increases clicks on first ad, doesn’t decrease it. Big surprise to them. This type of rigorous experimentation have helped them learn. Works until you have more than four ads, then clicks go down. So next time you complain about all those ads at the top of Yahoo? Hey, they’re paying the bills. Actually, doesn’t talk about what all those ads at the top of the page do in terms of overall relevancy, clicks on the natural listings.

Missing some now, sorry, because the wireless is going flakey again. And my usually dependable Verizon card isn’t always getting a good signal.

Joy of Yahoo is that they get huge samples to get statistically significant stuff.

Virtual works and “real world” becoming one and the same. Virtual world can influence your purchasing in the real world weeks later.

50 years after printing press was invented, most of the influence yet to be felt. Novels, billboards, newspapers — way forward in the future. As was much technology. “I believe the internet will have at least as large an effect on society … as the printing press .. and like the printing press … almost all those inventions and discoveries lie in the future.”

Innovation

Ari’s back, stressing that we should see how much talent and vision that Yahoo has now. And now he’s talking about how, in fact, that Yahoo is an “innovation engine.”

Again references of investing in cloud not because its sexy but helps with business.

Goal is to get all products to a cycle time of weeks [IE, hey investors, look at how quickly we'll be able to churn knowledge of what users want into delivering that content, along with ads. We're gonna be unmatched! We're alread unmatched! Which, by the way, for a content company may well be true].

And Carol’s on stage. Congrats her product people for presentations. “If anyone goes away from this and says is Yahoo a technology company? Then we’ve missed.”

Says nothing shown is promises with exception of those search mocks. One more presentation before BlackBerry break “Although you don’t need it, because you’re already doing it.” Laughs all around.

Keith Nilssoon coming up exec VP for developing countries.

International

Only 11.5% of ads are international today (IE, outside the North America). Didn’t catch if that’s online ads overall or just for Yahoo.

75% of Yahoo users come from international (IE, outside the North America. I mean there’s a slide that shows a pie that’s part international and part North America, as if North America isn’t part of the international community. But I know, I know, I get what they mean).

They’ve had a decentralized team with poor technology sharing so you’d get all those source code version and product inconsistencies “that effected our brand, our engagement with users and ultimately our ability to monetize.”

With work on local, became top cricket site in India. In Singapore (I think) surpass news sites like CNN & BBC.

Talk about doing some ads deals. Not covering what a mess it is that to buy paid search in various countries, you have to open separate accounts for each of them (at Google, one account can target the world). But that’ll get fixed with the Bing-Yahoo deal, so let’s not dwell on it.

Emerging markets only 2.5% of ad spend is online right now. “The battle for these emerging markets is happening today.” Companies that get in will be able to drive growth for some time.

So Back To Basic strategy. Give stuff on PCs and phones. Improve communication tools, email and IM. Global home page with local content. Know the markets are there. They’ll come online.

Keys to win? Mobile. 4X times more mobile users than internet users in emerging markets. In India, it’s 8X. So focusing on lightweight mobile friendly content. Partnering with internet cafes.

And we’re done. And, I’ve got to sadly depart the event. It continues through the afternoon with a focus on ad strategy and marketplaces and a financial overview. You can watch live later today here.

Overall, good job, Yahoo. The presentations do stress what a leading company you are (as I’ve said you are, see Yahoo The Failure: Myth Versus Reality). Let’s see if the analysts will move past the focus on “so what about search” that still seems to grip them at these types of presentations.

See also related discussion and articles on Techmeme.

When “activist investor” Carl Icahn forced his way onto Yahoo’s board in the middle of last year the company was resisting a takeover attempt from Microsoft. Icahn wanted to see a deal and was trying with all his might to broker one between the two companies.

He initiated a very public bid to oust Yahoo co-founder Jerry Yang as CEO and bring a slate of Microsoft-friendly candidates to the Yahoo board. He went so far as to file a shareholder lawsuit against Yahoo. The settlement gave Icahn a seat on the Yahoo board and control of three of 11 total board positions.

After Jerry Yang resigned as Yahoo CEO and Carol Bartz entered as the new chief executive, as you know, a search outsourcing deal was done. And now Carl Icahn believes his work is done; he resigned his board seat at the end of last week:

In a statement about his departure, Icahn said “there was not a need at this time for an activist investor.”

Yahoo’s stock price was hovering around $20 when Icahn joined the board. Now it’s just over $17. Good work Carl. Job well done.

Try as they might Yahoo is having a tough time convincing people that it’s still “in search.” On Yahoo’s earnings call earlier this week CFO Tim Morse, who led the call because CEO Carol Bartz was ill, used her analogy to describe Yahoo’s new way of positioning itself around search:

The next revolution isn’t with the algorithms that provide results, it’s in creating a better, more personally relevant search experience. This is where we’ll differentiate ourselves and compete vigorously without the billions required to keep up in the arms race that generating search results has become.

Let me give you an analogy that Carol has been using to explain this point. Consider basic search to be an Intel chip. An Intel chip is used in Dells, HPs and Macs to provide the computation needed to operate them but the differentiation between these products isn’t at the chip level, it’s in the different user experiences that are provided on top of them. It’s the same for us in search. We’ll innovate on top of the results that are provided to us by Microsoft.

While a clever way to discuss Yahoo’s new role, vis-a-vis Bing (the algo “chip”) it doesn’t seem to be convincing many industry insiders.

Yesterday at the Web2.0 event in San Francisco Google co-founder Sergey Brin made a “surprise” visit and talked about a range of things. Dow Jones newswires captured some of the discussion. Specifically Brin lamented the “abdication” of search by Yahoo. Here’s TechCrunch’s version of the relevant part of the exchange between Brin and interviewer John Battelle:

JB: Do you like Bing? You a Bing users?

SB: I use all search engines out there. Bing reminds us that search is a competitive market. There’s Powerset that Microsoft bought. There’s Cuil. There’s a lot of interesting stuff going on. It’s a shame Yahoo is abdicating.

JB: They would say they’re not.

SB: Sorry that was my impression.

JB: Do you have a comment on Microsoft/Yahoo search deal?

SB: I shouldn’t comment on that. But Yahoo had some interesting things, they should stick with it.

The Cuil folks should be pleased that Brin gave them a shout out.

Yahoo just announced quarterly revenues of $1.575 million, which represents a 12 percent decline from the third quarter of 2008 and is basically flat vs last quarter. However the company saw a 19 percent decline in search ad revenue YoY but flat sequentially.

Yahoo CEO Carol Bartz characterized Q3 as “solid” in the press release and said that the business had “stabilized.” Here are the top-level financials:

Other revenue information from the release:

• Marketing services revenues were flat and fees revenues increased 2 percent,compared to the second quarter of 2009.
• Marketing services revenues from Owned and Operated sites were $851 million for the third quarter of 2009, a 15 percent decrease compared to $1,002 million for the same period of 2008. The decrease was primarily driven by a 19 percent decline in search advertising revenue and an 8 percent decline in display advertising revenue.
• Marketing services revenues from Affiliate sites were $526 million for the third quarter of 2009, a 6 percent decrease compared to $561 million for the same period in 2008.

Here are some of the slides from the associated presentation:

And now the call, with prepared remarks (by CFO Tim Morse):

CEO Carol Bartz “came down with something, nothing serious” but she’s not on the call. I’m disappointed.

Morse is going through his remarks in a monotone that is just washing over me. He made statements about search revenues being basically flat sequentially, though they’re down 19 percent vs. last year. He said queries are up slightly (I believe) vs. Q2.  I wish Carol were on the call . . .

Quick update on Microsoft:

We’re not out of search; we’ll continue to innovate and create a “better more personally relevant search experience” without spending on the “arms race.” Search is like an “Intel chip.” The differentiation isn’t at the chip level it’s in the user experience. (Not all that persuasive.)

We expect the deal to close/be approved in early 2010. He cites the letter of support from the American Association of Advertising Agencies from yesterday.

Assuming the deal closes  . . . Morse talks about the transition to the new platform for advertisers (non-substantive remarks). We have experience with Panama, etc., etc.

Q&A session:

Question re display revenues and trends and why is Google doing so much better in search?

Morse stumbles: “It’s tough to compare to Google.” This quarter’s only “down 1 percent, that feels like stabilization.” Queries are up.

Question re vulnerability of affiliate business and increasing TAC rates:

Morse: We know that Google monetizes better so we have to pay more. There’s a “make whole” provision if affiliates defect to Microsoft but not to Google.

There were a range of questions about Yahoo’s display business and future outlook.

Guaranteed placement was strong in the second and third quarters.

Question re margins and cost containment

Morse says that internal teams will control costs and will be rewarded by Yahoo for doing so.

Questions about ad quality on the Yahoo homepage

Among other things, Morse cites the Yahoo homepage relaunch and “acceptance” and “positive reviews.” Homepage growth was in the “double digits.”

Questions re the conclusion of paid inclusion

Morse said shutting down paid inclusion will improve “overall  marketplace” and wouldn’t speculate on direct impact on future revenues.

Question re metrics surrounding the new Yahoo homepage

Up strong “teens” in terms of page views. Not all the US users have switched yet. In eight countries total; fully rolled out in seven of them. Avoids talking about anything more specific. It’s still “early on.”  All the metrics I’ve seen are “quite favorable.”

Question on mobile monetization

Morse: mobile is a focus for our future growth. Reach is really improving. Huge leader in mobile with 35 million users in the US.

Question on search monetization: query growth up but RPS down, why?

All of search was down 1 percent QoQ. Flat sequentially. An awful lot that we’re doing to “invest in these businesses and make them better.” He rattles off search improvements (awkwardly). We’re not “falling down, we’re not falling down at all.”

Question re the branding campaign, why?

It’s very early to assess success of campaign. We definitely expect this to translate into more users over time. About “revitalizing the company.” About getting us to back to where we were. Over the last few years we’d underspent on the brand. We’re also using it as an internal catalyst too. It’s about us and our corporate identity. In the future it will become more product focused. It will become a more or less permanent part of our cost structure.

Bottom line:

Overall the mood on this call was in fairly stark contrast with the mood and outlook on the Google call. In contrast, to the “we’re back” tone there, Yahoo seems to be tentative, uncertain and struggling to maintain its position in display and search (notwithstanding some good news in display). All the talk about innovating in search around the user experience felt unconvincing.

Bartz would have been a somewhat more buoyant presence and been able to inspire more confidence.

The Wall Street Journal is reporting that the new consumer-facing Yahoo branding campaign is starting to appear in New York, with a personalization theme: It’s You!. According to the article:

Yahoo is planning to reintroduce its battered brand to the public Tuesday with a massive global marketing campaign, according to people familiar with the effort.

The Internet company’s new tagline, according to one of those people: “It’s You!”

The Y in the “You” is the Y from “Yahoo,” and the famous Yahoo exclamation point will pop up too, this person said . . . The global campaign is focused on personalization and how Yahoo can help people navigate all their services and information online.

In the past, Yahoo has run numerous ad campaigns promoting individual services or the company as a whole. The “It’s You!” campaign sounds quite similar to 2004’s “Life Engine” campaign. At the time the press release announcing the latter effort said:

“Our goal is to showcase the multi-dimensional nature of our brand and reinforce how Yahoo! impacts the lives of its users every single day,” said Cammie Dunaway, chief marketing officer, Yahoo!. “One great way to express the idea of consumer impact is to hear it directly from and feature those people who use our ‘Life Engine’ every day.”

I don’t think I’d agree with the WSJ characterization that Yahoo’s brand is “battered,” but it’s not as hip/cool/lustrous as it once was. AOL faces the nearly identical challenge. Facebook, although not a portal, has taken the place of these portals for many people.

There’s always a question about whether advertising can change behavior. Certainly it can generate awareness. But Yahoo’s past efforts to promote its search engine failed to affect market share. The same was true with Ask’s commercials as well. Still there may be an opportunity to reintroduce the Yahoo brand as a way to help organize your life online.

If I were in the CMO role now occupied by Elisa Steele I would also emphasize Yahoo as a trusted source of information. The internet is increasingly noisy and chaotic and there are only a few sites that truly can lay claim to being trustworthy. Yahoo is one of them.

With a penis joke, AllThingsD previews a major new ad offensive from Yahoo, which will have distinct but related messages for advertisers and consumers. On the advertiser side of the campaign, Yahoo will reportedly stress its reach and scale in an IAB event keynote next week, coinciding with Advertising Week in New York:

The main message Bartz is set to deliver is that Yahoo is a powerhouse unlike any others on the Web when it comes to online display advertising.

Of course “reach” is all about audience which directly correlates with consumer usage. The Yahoo message for consumers will reportedly be (according to the AllThingsD anonymous sources) something like “your home on the web.” This would appear to be a variation on the Jerry Yang-era mantra: your “start page for the internet.”

Yahoo CEO Carol Bartz articulated some of this consumer messaging in her recent CNBC interview, which caused Danny to dub her the “Sarah Palin of Search.” In the interview she discusses Yahoo being the way that consumers “organize their lives online.” The new Yahoo homepage is one attempt at this. Another company called Facebook sees itself doing some of these same things, at least where friends and communications are concerned. And Google (search) is arguably the primary way that people navigate to intended destinations online.

Assuming the general accuracy of the AllThingsD article, these twin Yahoo campaigns conceptually work well. But, for consumers in particular, will the messaging line up with their experiences? Can Yahoo actually deliver on the idea of “your home on the web”? In some ways clearly yes, but (to date) not across the full range of consumer needs and interests. So if it wants to fulfill the promise of that slogan, Yahoo still has some work to do.

The best that ads can do is build awareness, suggest something or shape an impression. The products and experiences then actually have to deliver.

The Microsoft-Yahoo search deal isn’t a forgone conclusion. In fact, news out yesterday suggests the companies may face serious regulatory hurdles. Potentially, it won’t be allowed. That leaves me wondering. What’s Yahoo’s Plan B? Does it even have a backup plan, especially when CEO Carol Bartz has suggested Yahoo can no longer run search on its own?

In June — before the deal was announced — Bartz said this to the world:

“Yahoo doesn’t have to do anything with Microsoft about anything,” Bartz said at an investor conference.

Three months later, she reversed herself. A New York Times interview has her saying Yahoo couldn’t afford to do search on its own:

Ms. Bartz said she sold the search business because Yahoo could no longer continue to match the level of investment Google and Microsoft were making in searching, one of the Web’s most lucrative and technologically complex businesses.

Who does this? It’s like trying to sell a bricks-and-mortar business and saying you’ve got no choice but to do so. You’re not going to get a good price from your buyer (Microsoft), if they think you’re desperate or have no alternative (Yahoo’s already been barred from doing a deal with Google).

Worse, what if you DON’T sell that business? Are you just going to board it up? Are you going to shop it around to other buyers who realize you’re even more desperate now? Do they want to buy a business that you’ve said can’t afford to run?

That’s the situation Bartz is in if Yahoo can’t sell its search assets. Meanwhile, Yahoo employees keep leaving. Doug Cutting who left last month said his departure had been in the works for months and had nothing to do with the recent deal that was announced.

I totally believe that. I figure months before this, Cutting was smart enough to see Yahoo was done in search and wanted to move on. I suspect more people will be like that, and when Bartz has continued to suggest that Yahoo isn’t a search engine — even denies it ever was one — it just doesn’t seem that inspiring for anyone who wants to be involved with search.

Oh, but the user interface will be key! Bartz pushed that once again in a television interview out yesterday, likening search technology to being like an Intel computer processor that you build a computer around. IE — see how successful companies like Microsoft, Apple or HP have been without owning the processor? Yahoo can be the same without owning the “search processor.”

The UI isn’t going to change anything for Yahoo. In case there’s any mistake, I’ll say it again as clearly as possible:

USER INTERFACE CHANGES WON’T LET YAHOO COMPETE IN SEARCH

Got it? Write it down, someone come check back on this in five years. If Yahoo’s moved up in search share thanks to outsourcing search and just toying with the user interface, I’ll eat those words somehow — covered even in Yahoo purple frosting.

No one has succeeded as a general search engine just by making user interface changes. No one, in the past nearly 15 years of us having search engines. That’s like 150 “real” years. (For more, see A Search Eulogy For Yahoo and Why Search Sucks & You Won’t Fix It The Way You Think)

The interview ticked me off in other ways. Bartz downplayed search as something people spend only 3% of their time on. Hey, I don’t spend all my time shopping. But who do you think makes more money off of me, places I shop at or television stations that deliver me entertainment?

Bartz also joked about how “I don’t wake up in the morning and think gosh, ‘What am I going to search for’.” This was in reaction to one of the CNBC hosts interviewing her joking how Google’s big change to its home page was to make the search box larger. Yahoo, you see, is that central place where everyone starts their day.

Ha, ha, ha. Let’s laugh all the way to the bank, shall we? That “plain” home page earns plenty of money for Google from all the people who go there and, um, search on it. Making the Google search box bigger was a simple but effective change. Gosh, I’m pretty sure one of the Yahoo home page changes (it’s hard to keep track of them, as that page seems to change so often), was to make its own search box bigger. Let’s also put our heads in the sand about the fact that Google has a personalized home page service, iGoogle.

Bartz does an amazing job talking about all of Yahoo’s properties and downplaying Google as if it doesn’t compete in some of these same areas. I agree. Yahoo is a huge leader in many areas, as I wrote in my Yahoo The Failure: Myth Versus Reality piece last year. But Google does compete in a variety of ways. It’s investing in search AND in portal features. So’s Microsoft. It’s Yahoo that’s pulling back.

Watching that interview, I remarked on Twitter that Bartz is coming off with me like some type of Sarah Palin of search (Silicon Valley Insider got a kick out of that). I watch her do these TV interviews, and she’s got this “aw shucks” and “straight shooting” delivery that makes you want to believe in the things she’s saying, regardless of how they’re being spun. For me, the problem is that I know search too well for that type of spin to work on me. I just find it irritating.

I also find it amazing. Bartz is working so hard to marginalize search (last I looked, the second most popular internet activity after doing email). She’s working so hard to say that Yahoo has to give things up to Microsoft. What if she can’t dump search. What’s the Plan B? How do you recover running search on your own after having chopped off your own legs?

Bloomberg is reporting this morning that the US Department of Justice has decided to look more closely at the MicroHoo search deal. Microsoft and Yahoo are to provide more information on their “ad pricing and product plans, a person familiar with the matter said.” This is not a surprise.

The companies must convince regulators that the deal will not harm competition or adversely affect SEM pricing. They must also do a similar dance in Europe, where a parallel process will take place. In the end, however, it’s likely the deal will be approved given broad US and EU concerns about Google’s market position and this deal as a possible counterweight to that dominance.

And in a CNBC interview Yahoo CEO Carol Bartz says she would have accepted the Microsoft takeover offer that then CEO Jerry Yang and the Yahoo board rejected. (That would have had a tougher time with regulators than the search-only deal now before them.) Bartz also asserted that Yahoo was still in the search business by controlling the search experience around Bing results.

Bartz also discussed many other aspects of Yahoo’s strategy and value to users. You can see the full interview below.

Investors unhappy as Yahoo boss Bartz earns $2m from share sales from the Guardian reports that Yahoo’s CEO sold $2 million worth of shares since March of this year. Clearly, Yahoo investors are not happy that the CEO would make such a significant sale when the company continues to struggle to find its place.

The Guardian reports the sales were made in March and June for the amounts of $830,000 and $1.14 million respectively. Yahoo’s General Manager, Mike Callahan, has sold $1.35 million in shares this past year.

Yahoo investor, Eric Jackson of Ironfire Capital, said “Two million already cashed out for Bartz is too much, too soon.” He added that it “doesn’t really fit with her ‘I didn’t need this job as I was retired’ image she portrays”.

Of course, we cannot forget that the most public Yahoo investor and board member, Carl Icahn has dropped 12 million shares of Yahoo recently. All this doesn’t make Yahoo look all that attractive in the near or long term future.

Postscript: In Danny’s live blogging coverage of the Yahoo “It’s You” Press Conference, someone asked Bartz about this news. She responded that she did not sell a penny of Yahoo stock. What people saw was that some of the stock she received were vested and held for tax purposes. She explained, “Like if you got 100 shares, 20 would be held back. But it gets recorded as if it is a share.”

Investor and Yahoo board member Carl Icahn has reportedly reduced his holdings in Yahoo by roughly 12 million shares, according to a recent regulatory filing with the US SEC. Icahn became a board member last year after a prolonged and very public episode that involved heavy criticism of then Yahoo CEO Jerry Yang and an attempt to oust the existing Yahoo board, including Yang, for blocking Microsoft’s earlier takeover attempt.

As a board member he obviously supported the new MicroHoo search deal, which has so far turned out to be a disappointment to most investors. It also appears to have created similar disappointment and a new round of internal frustration and  distraction among some Yahoo employees and engineers. According to AllThingsD:

One in a series of weekly Friday communications from [Yahoo CEO Carol Bartz], some of which I have posted before, this [memo] got a lot of attention internally, especially among the down-in-the-dumps engineering staff, who were less than pleased with the damn-the-torpedoes-stop-yer-whining tone of the memo.

Whatever the reaction, it is certainly a classic Bartz times 10–a definite back of the hand for those Yahoos who perhaps dwelled too much on whether or not they liked the recent search deal she struck with Microsoft (MSFT).

Here’s the basic gist of it: Fie on naysayers, stop bellyaching, Yahoo rocks and get back to work!

The internal Bartz memo referred to above expresses impatience with implied employee frustration in the wake of the MicroHoo search deal:

So get out of the sugar low–we have work to do. Stop staring at our navels, stop arguing with each other. Stop debate, debate, debate, and let’s focus on the competition.

As Bartz says in her memo, the MicroHoo deal is done (though it still must pass regulatory muster) and now she’s trying to refocus employees outwardly to regain momentum. (It seems Yahoo has been burdened with one internal controversy and distraction after another for at least two years.)

Bartz is trying to move on but the controversy may linger for some time as the deal is implemented.