Yahoo Should Put Ad Budget Into Products

Last night the WSJ reported that Yahoo will spend an estimated $75 million to $85 million on a campaign to promote itself and its homepage. The initial TV spot (below) is critical of Google and sets itself up in opposition to the search engine as a more desirable homepage because it does more stuff. (see corrections below)

When I saw the ad however it seemed completely misguided and off the mark.

Facebook is now Yahoo’s main rival and one that increasingly threatens to take its place for consumers. Indeed, Facebook is making a quiet if concerted push to become the homepage of choice.

As we’ve discussed many times over the past few years, major ad campaigns don’t usually translate into increased usage or traffic for search engines or Internet companies otherwise. Most companies have failed to learn that lesson repeatedly.

There are selected cases where a good product can build awareness and gain some momentum with advertising. Arguably Bing has been able to do that. However it’s still not clear how much the ads have contributed to Bing’s share growth. Apple is a company that spends millions on advertising to build awareness and the image of its consumer products, but its products are well designed and effective. Advertising for the Verizon/Motorola Droid has also been effective in building the Android brand and awareness.

But there are good products behind those campaigns. Many of Yahoo’s products and services are strong but many are equally in need of upgrades or improvement.

Yahoo’s previous $100 million “It’s You” campaign is widely considered a failure. The WSJ sums it up:

Fixing Yahoo’s battered image has been a top priority for its chief executive, Carol Bartz. Just months after she took the reins last year, she unveiled with much fanfare a $100 million campaign with the tagline “It’s You,” focused on personalizing the online experience.

The campaign failed to increase traffic to Yahoo’s home page or improve its share of the search market. In March, Ms. Bartz conceded it “didn’t have a really good call to action.”

Shortly after the campaign debuted last year, Yahoo ditched its ad agency, WPP PLC’s Ogilvy & Mather, and hired Omnicom Group Inc.’s Goodby Silverstein & Partners. (Ogilvy & Mather still helps Yahoo in some markets outside the U.S.).

I’m not going to argue that Internet companies should never advertise, but advertising can’t compensate for other challenges that are more fundamental. (Yahoo might have had more success advertising search filters and features, which have been out for a year but not widely known by the public, some of which Google seems to have duplicated with its new UI — or its mobile sites and homepage.)

But rather than trying to restore or improve its “brand image” with TV — and is that the place that its target audiences are these days? — Yahoo would do better to invest in building or improving specific products and/or making targeted acquisitions that support a larger product strategy or vision.

Yahoo seems focused on cost containment and brand marketing, however. Wall Street likes the cost containment part, but that is not going to “bring Yahoo back into the conversation,” to use CMO Elisa Steele’s words. Better user experiences and new or improved products that actually do things will.

Postscript From Danny Sullivan: What Greg said :)

Seriously, the latest campaign is stunningly stupid for many reasons.

Let’s start with the entire “Ha Ha, Google has a blank home page” approach. When Yahoo’s ad agency did their no doubt extensive research to produce this ad, I wonder if they learned that in December, Google deliberately made its home page even simpler (see Official: Google Switches To Fading Home Page).

Who do you believe is smarter about what consumers want from Google, Google — which extensively tests any change it makes — or Yahoo’s third party ad agency.

Yeah.

OK, but maybe those same Google users being targeted will like the idea that Yahoo has all these other things they might not know about. Sure, maybe. But they’re unlikely to give up Google.

When Verizon ran Droid ads against the iPhone, it attacked real problems that iPhone users had with the iPhone, such as the inability to multitask. Yahoo’s attacking Google for being simple which is probably want many Google users love most. And if you love simple, showing as the video does how all this clutter starts to literally roll all over the place just doesn’t seem a telling point.

How about the issue that the last ad campaign, according to Bartz herself, didn’t have a good call to action? Well, I saw the original campaign when it was debuted at a press conference last year. The message presented felt like the same message I’d seen Yahoo put out for years — and asked Bartz about it. Her reply:

I’m actually happy that you think it’s somewhat the same, because that’s what Yahoo stands for.

Um, OK — except now, it turns out that campaign was a waste of millions of dollars. To make up for it, the solution appears to be that the wrong ad agency was selected, so let’s get a new group in that has all the answers.

And that’s the key — why’s this ad agency going to get it even better. As Greg says, ads often seem to fail to work with internet companies. With search companies, they really fail to work. Consider these very clever ads from 1998:

It’s like a video deadpool of companies that hoped clever ad agencies and TV spots would keep them alive in search. That didn’t happen.

Currently, Bing is having some nice success with its own Bing TV ads — but that’s a “success” of gaining roughly 2-4% of share. That’s huge for tiny Bing, but it’s tiny compared to what Yahoo hopes to get. And we still don’t know if they’ll keep it when the ads stop.

Postscript from Greg: We received a note from one of Yahoo’s PR firms that there were some factual errors in the story above. Apparently the video isn’t actually a real TV spot. Rather, according to the missive I received, “The video highlights the philosophy & possible creative for Yahoo!s campaign.”

The PR representative also said that the “$75-$85M spend range is a subset of the $100M Yahoo! announced last year. It’s not incremental.”

OK. We’re glad Yahoo didn’t already blow its $100 million budget and prepare to blow $75 million more. And we’re glad the company has an opportunity to rethink the “philosophy & possible creative” of the campaign.

Related Topics: Channel: Industry | Features: Analysis | Top News | Yahoo: Business Issues | Yahoo: General | Yahoo: Marketing

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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