Yahoo Decides to Friend Facebook ;).
Yahoo Inc. watched as social-networking website Facebook Inc. stole the attention of users and grabbed a major share of the online-advertising market.
Now the Internet pioneer is following an old mantra: If you can’t beat ’em, join ’em.
After struggling for years to develop services that compete with the social network, Yahoo in recent months has installed tools such as Facebook’s “Like” and “Share” buttons on its news and sports websites in order to help Yahoo users share articles with their contacts on Facebook, among other things.
Yahoo, like other content providers, is seeking to leverage Facebook’s huge user base to draw more traffic back to Yahoo after readers click on the sharing buttons. The moves also are aimed at ensuring that links to Yahoo content appear in the search feature on Facebook’s site. Yahoo is using similar approaches with Twitter Inc., the Internet messaging service, and Zynga Game Network Inc., which offers online social games.
Yahoo hopes the moves will solve one of its biggest problems—a 10% slide in the time users collectively spent per month on Yahoo sites last year, according to research firm comScore. Yahoo’s internal research shows the main culprit for the slide is Facebook, people familiar with the matter said.
“‘Frenemy’—part friend, part enemy—is where Yahoo finds itself with Facebook,” said David Karnstedt, a former senior vice president of North American sales at Yahoo and currently chief executive of online marketing firm Efficient Frontier.
The enemy part, Mr. Karnstedt said, is that Facebook’s ad business is big and growing fast, sometimes at Yahoo’s expense. “The friend part is that Yahoo has stopped trying to get people not to go to Facebook and decided it was better off enabling that, largely because it didn’t have a real choice,” he added.
“I think ‘frenemy’ is not the right word. That implies more enemy than friend,” said Dan Rose, Facebook’s vice president of partnerships and platform marketing.
Yahoo Chief Executive Carol Bartz recently called Facebook her company’s top competitor. That is certainly true in U.S. display ads, a market that reached nearly $9 billion in 2010. Yahoo was No. 1 with 16.2% of the market, down from 16.5% in 2009, according to research firm eMarketer. Second-place Facebook saw its market share rise to 13.6% from 7.3% the prior year, eMarketer said.
“They’re a hot site, but there’s room for more than one of anything,” Ms. Bartz said at an event in December.
Some others at Yahoo stress recent collaboration with Facebook. “They’re a partner, and a good one at that,” said Mike Kerns, Yahoo’s vice president of social, games and personalization, in an interview. “We view them and their platform as a great opportunity to both distribute Yahoo and its partners’ content” and “to enhance user experience” on Yahoo.
Mr. Rose, Facebook’s vice president of partnerships, said the company doesn’t think of Yahoo as a competitor. “We’ve had a strong partnership in place with Yahoo for over a year, and we anticipate partnering with them even more deeply in the future,” he said. “Our interests are aligned to help people connect and share content with their friends from wherever they are on the web.”
By contrast, search giant Google Inc., which rose past Yahoo in the Web-search market during the last decade, has recently invested in developing a social-networking-type experience that could rival Facebook’s, people familiar with the matter have said.
So far, Yahoo’s partnership with Facebook hasn’t reversed negative trends. Last year it began letting users of its email service to access Facebook without leaving Yahoo, hoping to keep users there longer. Blake Irving, Yahoo’s chief product officer, said in an interview late last year that the feature “has not been seeing mind-blowing use.”
But he added that social networking is “an open playing field” and the company was developing new ways to help users stay connected with the “small groups of people that actually matter to you,” rather than a vast network of hundreds of people—including work colleagues and casual acquaintances—that many people now include as “friends” on Facebook.
As Facebook becomes a key place where people discover content such as news articles, Yahoo also sees an opening to provide technology to online content providers such as newspapers so they can better control of how users find and interact with their content, rather than leaving it up to Facebook and others.
For example, last week Yahoo made a public pitch to magazines and newspapers to use its software to reach users of tablets such as Apple Inc.’s iPad with features such as flashy, interactive graphics and photos. Yahoo didn’t name any partners.
Yahoo launched or bought several social-networking-type services before ultimately forging partnerships with Facebook:
|2005||Launches Yahoo 360 social network; buys Flickr photo-sharing site|
|2006||Tries to buy Facebook; deal falls apart|
|2007||Stops developing Yahoo 360; starts Yahoo Mash|
|2008||Yahoo Mash abandoned; launches Yahoo Updates|
|2009||Talks to Facebook about possible partnerships|
|2010||Lets users access Facebook and Twitter content while on Yahoo; adds Facebook “Like” and “Share” buttons to more pages; launches Yahoo Pulse|
|2011||Allows users to “log in” to Yahoo using Facebook, Google credentials.|
Source: The company; WSJ research
Who said? Amir Efrati said😉.