Yahoo, by Denise Zimmerman
Buying Twitter could enhance Yahoo's key initiatives and further punctuate its market differentiation, plus beef up its search offerings to make it more competitive with rivals AOL, MSN, and Google. For Yahoo, owning Twitter could provide more heft to an already hefty proposition with real-time, mobile search and the integration of Twitter with its other services, applications, features, and content.
At the cornerstone of Yahoo's key initiatives is Yahoo Mobile web, a customizable mobile portal that acts as a homepage. This recently announced launch potentially strengthens its position in wireless internet and mobile apps, one of the fastest-growing sectors in the industry, and underscores its focus in third-party mobile application development and mobile search. Yahoo's mobile strategy provides a clear opportunity to better leverage the applications, platforms, and properties -- including social media features -- it has purchased over the last few years, as well as newly launched or developing services.
Integrating Twitter would provide a more personal and portable search experience and could potentially drive more revenue, boosting its developing competitive position and revenue models. Furthermore, if its strategy to weave social features throughout its content to more effectively monetize social features and applications proves out, owning Twitter may enable it to capture more profits than if it just partnered to drive revenue.
But Yahoo has a history of buying and then failing to integrate otherwise great social media tools -- cases in point: Flickr, Delicious, Jumpcut. In January 2008, Yahoo was testing the integration of Delicious user-generated bookmarks into Yahoo search results pages, but that appears to have disappeared. Integrating word-of-mouth references into search results and potentially applying a database of human-tagged pages may advance the relevancy of search, particularly on mobile. There are some challenges here, as well. Tagging must be seamless and a critical mass of tagged pages must exist for it to really be effective. Perhaps its mobile strategy will help elevate this effort again, giving heft to Twitter or real-time search.
If its mobile strategy is key to fueling an effective Twitter integration, Yahoo still has structural distribution challenges to overcome, as it has no direct ties to cell phone operating systems. However, it does have well-designed mobile software applications.
The potential acquisition costs present a challenge, too -- $1 billion may be too rich for Yahoo's pocketbook, and the direct benefits of acquisition need to be clearly articulated and justified. It can't afford to pay to be "cool."
To get an idea of how Twitter may be integrated into Yahoo, look at its Mobile services and OneSearch product descriptions. The company hopes the strategy will help link its disparate properties, bringing more advertising dollars and growth. Even without the acquisition of Twitter, Yahoo could very well evolve to look more like Facebook, a personally customized homepage integrating selected content, features, and applications.
For customers, the integration of Twitter into Yahoo, specifically its mobile portal, would mean simple, customized, and portable access to information, content, applications, search, and more. For advertisers, it could mean more ways to connect effectively across channels in ways that are more relevant, timely, and connected to consumer behavior that accounts for but does not compete with social media behavior.
"Should" Yahoo buy Twitter? Probably not. While it would lend some heft to existing initiatives while potentially boosting its overall developing strategy, the investment may not ultimately pay out. It also may not be essential to deliver on its market promise. And while Twitter may be a current phenomenon, it is most likely the first and not the only of its "kind." There are certainly more to come.
Denise Zimmerman is president and CSO at NetPlus Marketing Inc. You can follow her on Twitter at www.twitter.com/dzimmerman.
