Yahoo’s Failed Transition to Mobile
When Yahoo installed a new management team led by Marissa Mayer in mid-2012, their strategy for core Yahoo was clear: parlay Yahoo’s successful desktop franchises — mail, news, sports, finance, weather — into a dominant position in mobile. Yahoo’s most important desktop properties matched the most common use cases for mobile phones, a point Marissa Mayer emphasized repeatedly in conference calls and interviews:
When I thought about the strategy for Yahoo I pulled the list of what people do on their phones in rank order of frequency… the list looks like e–mail, check the weather, check the news, share photos, get financial quotes, check sports scores, play games. You get the idea. It was funny because I would go and recite that list as the new CEO of Yahoo and I would say, ‘What am I doing?’ And my family and friends would say — ‘You are describing Yahoo’s business.’ I would say, ‘No, I’m listing in frequency order what people do on their phones.”
Over the last three years, Yahoo has hired and acquired significant mobile developer talent. Starting with just a few dozen mobile developers in mid-2012, they have recruited a bigger team to develop Yahoo-branded apps, and acquired Tumblr, a mobile-skewed social network.
Starting in their Q4 2014 earnings call, Yahoo started breaking out the performance of their “MaVeNS” businesses — Mobile, Video, Native ads, and Social. MaVeNS revenue is 34% of total Yahoo revenue (as of Q3 2015), growing at 43% YoY, and for the last three quarters mobile revenue has represented 64% of MaVeNS revenue. So mobile is a key contributor to the financial metric Yahoo most frequently recognizes.
While Yahoo has pursued deals to increase their non-MaVeNS revenue, these deals have generally come at a high cost. For example, over 90% of their incremental search revenue from their Mozilla Firefox distribution deal has been consumed by TAC. Core Yahoo’s future depends on either an inflection in the returns on inorganic desktop growth, or continued traction organic mobile growth.
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In order to evaluate Yahoo’s performance, we leveraged a proprietary panel of millions of smartphone users in 75 countries. Our panel allows us to track share changes between apps across a variety of metrics — Daily/Weekly/Monthly average users, time spent, sessions, and install base. Our analysis of Yahoo’s mobile performance is outlined in our 7Park Data Event Insights Report.