Yahoo's Open Invitation
Like counterparts at Facebook, CEO Jerry Yang plans to give developers more leeway in building tools designed to keep users on its pages longer — Last year it was the so-called Peanut Butter Manifesto, a sharply worded internal memo from a Yahoo! (YHOO) …
Context & Ripple Effects
A year after the Peanut Butter Manifesto — the sharply worded internal memo calling on Yahoo to sharpen its focus — CEO Jerry Yang is answering the engagement problem with openness rather than cuts: developers will get more leeway to build tools on Yahoo's pages, explicitly following the playbook Facebook has used to keep users on-site longer.
The timing matters. Facebook has climbed to third place in page views, and Yahoo is hedging with distribution as well as platform moves — on the same day, Yahoo Europe locked in an exclusive multi-year deal to manage display and video advertising for Bebo across the UK and Ireland, reaching over 11 million users of the region's most popular social network.
First-order effects
- Outside developers gain the ability to build tools that run on Yahoo pages, directly attacking the time-on-site metric that the company's internal critique flagged as its core weakness.
- Bebo hands Yahoo its entire UK and Ireland display and video ad business exclusively, giving Yahoo social-networking ad inventory it does not own outright.
Second-order effects
- Facebook's developer-platform advantage now forces every major portal to decide whether to open up or cede engagement, turning third-party app ecosystems from experiment into table stakes.
- In UK and Irish display advertising, rival networks lose access to Bebo's audience, concentrating social-graph ad inventory among fewer sellers.
Third-order effects
- If the pattern holds, portal economics shift from owning every property on the page toward aggregating engagement through partner-built applications and exclusive ad partnerships — scale in reach mattering as much as ownership.
- Social networks' user bases become advertising assets that can be licensed out wholesale, blurring the line between media owner and ad intermediary.
The trend: Consumer web platforms are racing to copy Facebook's open-developer model, trading closed control for third-party tools and exclusive ad deals that extend engagement and inventory beyond their own pages.