The due date for Yahoo CEO Jerry Yang’s strategic plan isn’t here yet, but that hasn’t stopped the handicapping. Bear Stearns analyst Robert Peck has a 22 page report addresses Yahoo’s options.
His conclusions:
- Yahoo will have to address its social networking strategy since Comscore reckons that social sites (think Facebook and MySpace) account for 60 percent of the world’s Internet users.
- These social sites have scattered the ad revenue pie.
- Social sites threaten the portal business model–also known as Yahoo’s bread and butter.
- A company like Yahoo could monetize a social site with behavioral targeting.
The big question: What is Yahoo going to do about it?
Peck writes:
“One of the topics we feel the company must be reviewing closely is Social Networking. Yahoo! has looked at this closely in the past, and in our opinion needs to decide what steps (if any) need to be made for Yahoo! to solidify its future with the impact coming from this ‘emerging’ phenomenon. We put emerging in quotes because social networking is nothing really new - Friendster was started back in 2002, and Yahoo! already has its own social network in Yahoo! 360. However, industry data shows that Yahoo! 360 has been losing ground to more popular networks, and to compound the problem that social networks are growing much faster than the “traditional portals ” like Yahoo!.”
Peck also notes that Yahoo needs to step up its social media initiatives via acquisition or partnership “or risk being marginalized in some of their business.”
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