Yahoo’s Mobile Growth Signals Marketers’ Shifting Priorities

We just finished reading Nicholas Carlson’s book on Marissa Mayer and Yahoo, and  we think it’s a must read for anyone in the media business.  Set aside the politics, the boardroom battles and the glamorous Vogue photo shoots and you have a picture of a tremendously talented and hardworking CEO who during the past two years has revolutionized the Yahoo product with a strong focus on mobile. If you haven’t visited Yahoo’s various media sites in a while — especially news, weather, and tech — you will find them totally transformed from the old Yahoo. They have the thoroughly modern, easily navigable look of a Flipboard or  Circa, and the mobile versions have even won design awards from Apple.  It’s easy to see that Mayer has taken seriously the need to design data-driven user experiences that can attract younger readers.

Tumblr, too, continues to do well.

And yet, Yahoo’s revenues did not grow in 2014.  Does this mean betting the farm on mobile was wrong? Here’s Mayer putting the best spin on things in the 2014 earnings release:

“I’m pleased to report that our performance in Q4 and in 2014 continues to show stability in our core business,” said Marissa Mayer, CEO of Yahoo. “Our mobile strategy and focus has transformed Yahoo and yielded significant results. In Q4, we saw $254 millionin mobile revenue, up 23% quarter-over-quarter. Across all of 2014, we saw gross mobile revenue of $1.26 billion and GAAP mobile revenue of $768 million. Our investment businesses – mobile, video, native, and social – collectively delivered more than $1.1 billion in GAAP revenue, up 95% year-over-year. These growth drivers have really focused our investments and energy on the future of digital advertising.”

The future of digital advertising. Mobile. In those words lie the answer to why Yahoo isn’t doing so well presently, and why it will do better in the future. And also in those words is a lesson for all other media execs who have yet to make big strategic bets on mobile.

Because Mayer was a tech exec and not a media exec, she focused on mobile from almost the moment she arrived at Yahoo. She knew that was where consumers were headed, and she wanted to get there first to beat them there. But for the same reason — because her background is in tech and not in media — she underestimated how slowly the advertising community would move its budgets to mobile. As a result, she landed Yahoo squarely on mobile just in time to meet her users but a couple of years before marketers realized the need for a mobile strategy and the bigger need to shift budgets.

Mayer might have been too early to mobile, but if you look at the paragraph above you’ll see how quickly the mobile business is growing. Either this year or next it will overtake the traditional Yahoo display business. And then it’s our opinion she will be considered a success in her transformation of a company everyone thought was out of the major leagues.

How is your mobile user experience?