Yahoo!'s Curious $100 Million Marketing Program

Yahoo! (YHOO) will spend $100 million marketing itself to Internet users over the next 15 months. That is odd because there is probably in not a man, woman, or child who uses the Internet and has heard of Yahoo!.

Yahoo! claims to have almost 600 million users around the world. comScore says that the portal has over 100 million unique visitors in the US each month.

Yahoo! (YHOO) may be trying to “rebrand” itself, but to what effect? The company has a modestly good search engine capacity. No amount of marketing is going to convince many people that it is better than Google’s. Consumers have already made their decision about that based on years of behavior.

Yahoo! cannot market itself as a source of much original content. It aggregates almost all the information that it offers to visitors. That model appears to be very successful, based on the traffic that the portal gets.

Yahoo! can claim that it is one of the world’s best places to find information, entertainment, jobs information, e-mail, and instant messaging. Web users already know that, but most have fixed behavior patters in terms of which sites that visit and what internet services they use. People who use MSN Mail are not going to switch to Yahoo!’s e-mail products. There is not enough difference between the two services and people who have used a mail service for years have information and contact data that they are not going to move from one portal to another.

Yahoo! has a modest business that is not growing much any more and does not make a lot of money. Its search deal with Microsoft will substantially increase its margins as it cuts spending on its own search development and costs. That is as good as it gets. Spending $100 million to say what is obvious only shows that management knows how to waste money.

Douglas A. McIntyre