Yahoo's Internal Three Year Plan: 1 Billion Users And $10 Billion In Revenue
Yahoo unveiled a bevy of new product features today at a press event, and Yahoo product chief Blake Irving told the crowd “You're going to see things over the next few years that will feel a little bit different.”
Context & Ripple Effects
Yahoo had already laid out a financial plan for investors in 2008 and, in 2009, pitched advertising around a more personalized user proposition. The new three-year targets turn that broad repositioning into explicit scale and revenue benchmarks for Yahoo's product organization.
The plan arrives as Yahoo is opening account access through OpenID, permitting commercial use of Yahoo Updates data, shifting search-result pages to Bing, and building local-ad relationships with Gannett and Valassis. Product changes therefore matter not only as interface updates, but as inputs to audience reach and advertising sales.
First-order effects
- Yahoo's product team, led publicly by Blake Irving at the event, gains measurable targets: product releases must support the stated goal of 1 billion users and $10 billion in revenue.
- Yahoo's local-ad partnerships with Gannett and Valassis become more central to translating a larger audience into advertising revenue.
Second-order effects
- Microsoft's Bing-powered search pages leave Yahoo with less need to differentiate through its own search technology and more pressure to differentiate through Yahoo-owned products, identity, content, and ad experiences.
- Opening Yahoo Updates for commercial use and simplifying sign-ups via OpenID give developers and advertisers more reason to integrate with Yahoo, tying ecosystem participation to the company's user-growth goal.
Third-order effects
- Yahoo is moving toward a partnership-led portal model: outsource or share commodity infrastructure where it can, while concentrating product investment on audience engagement and advertiser access.
- If that model holds, Yahoo's strategic test shifts from owning every service layer to whether its product and advertising partners can jointly convert user scale into revenue.
The trend: Yahoo's plan is one data point in a shift toward platform partnerships and open services as established web portals seek audience growth and more targeted advertising revenue.