Businessmodel of Yahoo

Customer Segments

Yahoo provides products and services to the mass consumer market, to online advertisers and to publishers and developers.

Its online portal – which provides news and sports updates, search tools, directory information, shopping, and email services – can be accessed by anyone with an internet connection. Yahoo’s more targeted offerings appeal to smaller, niche consumer markets, including small businesses, financial professionals, recruiters and job-seekers. The Company’s recent acquisition of microblogging and social media platform Tumblr in 2013, suggests that it is seeking to increase its reach among young internet users.

The breadth of Yahoo’s online presence, via a number of its own internet properties and affiliates, makes it an attractive partner for advertisers and brand names. It also includes among its customers a number of application developers and publishers who wish to access the Company’s network of contextual advertisements in order to generate their own advertising revenue.

Value Propositions

To its consumers, Yahoo’s most significant value proposition is its varied suite of free-to-use services and apps, notably its email service and news portals. As an online brand – the services of which are available both through desktop browsers, mobile browsers and mobile apps – convenience is also a major factor. The Company’s search engine allows consumers to access information with ease, and its keyword-led search advertisements provide appropriate ads for each indidvual user.

With regard to advertisers, Yahoo’s greatest value is its large user base. According to some reports, the Company’s various desktop and mobile sites are accessed by more than 1 billion active users each month, more than 600 million of whom access sites including Yahoo Mail, Yahoo Sports and Yahoo Finance via mobile devices. Advertisers wish to capitalise on this large market and the opportunities offered by keyword advertising.

Channels

Yahoo’s online portal is accessible via its desktop and mobile websites, as well as through its multiple Apple iOS and Google Play apps for email, news, messaging, sports, finance, weather, and fantasy sports, among others. Many of Yahoo’s products are also available through the Company’s multi-product sales team.

Customer Relationships

The vast majority of Yahoo’s products and services follow a self-service or automated model and require no direct interaction with the Company itself, with some products being tailored to user preferences.

The Company provides an online customer help centre for its users, and can interact directly with consumers via its Facebook and Twitter customer care accounts.

Yahoo’s advertising and publishing customers receive a greater degree of personal assistance to ensure that their individual needs are met.

Key Activities

Yahoo is engaged in providing Internet search, communication and digital content services through a variety of platforms organised around its internet portal. The Company’s products include search, communications, and digital content relating to news, sports and finance. It also oversees the activities of photography network Flickr and short-form blogging platform Tumblr. Yahoo also provides advertising opportunities to ad agencies and app developers.

Key Partners

Yahoo’’s main partners relate to its advertising and search activities. On its website Yahoo discloses a list of its preferred advertising technology partners, including Ensighten, Sprinklr and Marin Software.

Yahoo also has a number of partners with which it collaborates on its search tools, notably Microsoft whose Bing search engine powers Yahoo searches. In 2014 the Company signed a deal with Mozilla that made Yahoo the Firefox browser’s default search engine, and has an agreement with Google under which some of Google’s search results and advertisements will be put into Yahoo’s own results. The Company has also partnered with Yelp to bring more accurate local data into its searches.

In addition to its main advertising and search partnerships, Yahoo has also agreed several media streaming and video partnerships, including with the NHL, PGA Tour, Sundance Festival and the BBC.

Key Resources

Yahoo’s key resources are its technology, its brand identity and its personnel. The Company’s server space and data centres are key to fulfilling its services and activities, as are its proprietary technologies and IT infrastructure.

Searches of records held by the US Patent and Trademark Office, however, found no patents registered under Yahoo’s name. Yahoo’s engineering and sales teams also play a key role within the Company. As a publicly-listed entity, Yahoo has numerous investors. It also holds shares in profitable businesses, including a minor stake in Chinese online marketplace AliBaba.

Cost Structure

Yahoo’s most substantial costs come in relation to the maintenance of its technology infrastructure, the operations of its sales and marketing team and personnel costs. Costs are incurred by renting server space, operating data centres, and running sales and marketing and research and development teams, as well as managing the Company’s various partnerships.

Yahoo also operates numerous regional offices worldwide, all of which accrue fixed operational costs including office space rental and utilities.

Revenue Streams

Yahoo’s revenue is generated almost exclusively through search and display advertising. Search revenue is generated by advertisements placed on search engine results pages – both on Yahoo properties and affiliates – that are targeted to match key search terms. Yahoo has a revenue sharing agreement with Microsoft with regard to its search revenue as part of the agreement that sees Yahoo searches powered by Microsoft’s Bing engine.

Yahoo’s display revenue – generated by more traditional general advertisements placed on Yahoo and affiliate sites in the form of images, video, audio, and text – accounts for a similar portion of the Company’s total revenue. Yahoo’s display revenue is divided into further segments, including: mobile, which relates to advertisements placed on mobile platforms; video, displayed through partnerships with Good Morning America and Live Nation, as well as directly via Yahoo’s own original content; native, through the Company’s proprietary advertising marketplace Yahoo Gemini; and social, via advertisements placed within Yahoo’s social network Tumblr.

Yahoo has invested in new advertising technologies with a view to growing its advertising revenue. This includes: BrightRoll, a brand of programmatic advertising technology that aims to help advertisers connect with consumers across multiple devices; and Flurry, which is designed to optimise personal advertising on mobile devices.

While the majority of Yahoo’s products and services are free to access, it additionally offers a number of fee-based products through its Yahoo Small Business, Yahoo Finance and Yahoo Entertainment arms. Yahoo also provides premium internet packages and a Paid Inclusion service, which guarantees that customers’ websites are included and updated in the Company’s search index.