Wednesday, April 12, 2017

Some Ways Yahoo Failed Big

The article “Seven Ways to Fail Big” explains seven major business moves that account for most business failures, the seven “sirens” being the synergy mirage, faulty financial engineering, staying the course, pseudo adjacencies, wrong technology bets, consolidation rush, and roll-up. Although such ideas are not always bad, they indeed serve as danger signals that some companies overlook, including Yahoo. Last year, we witnessed Yahoo, once a web giant valued at $125 billion, being sold to Verizon in a humble amount of $5 billion. So what business moves doomed Yahoo to fail big? From the seven, I will be focusing on sticking to the current strategy, as it is a very relevant and compelling reason for Yahoo’s downfall.

Failing to adapt to significant market changes definitely hurt Yahoo, as it overlooked rapidly changing consumer trends. When the popularity of mobile products and social media platforms was growing explosively, Yahoo was only focused on its web products. Yahoo jumped into the mobile app market and began to grow its mobile app team only after its competitors such as Google and Facebook became extremely successful for their mobile apps. This hasty development of numerous apps led to poor quality apps and none of Yahoo’s mobile apps had big hits, with the exception of Yahoo Mail that had some success.

Yahoo’s digital advertising revenues continued to fall as it struggled to gain substantial market share in mobile advertising. As the mobile app market’s trend shifted from content-based apps to communication-based apps, Yahoo’s competitors such as Facebook quickly responded. Communication-based apps led consumers to spend much more using the app than communication-based apps, and it attracted advertisements. Thus, Facebook heavily invested in its Facebook Messenger app, leading to more advertisements and thus a significant increase in its revenue. However, Yahoo failed to adapt, and was invested in mobile apps including Yahoo Weather, a content-based app that does not motivate consumers to spend much time using. Desperate to push out apps late into the game, Yahoo failed to have a far-sighted strategy in the mobile app market and its market share of the worldwide digital ad market to fall significantly.

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