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Search for “uncle” on Google, and Yahoo shows up…

So here’s something you don’t see every day: a company conceding its market space to the competition. My favorite comment: “To boost revenue from each search, Yahoo! plans to make ads more relevant to search terms, meaning people will be more likely to click on them. Advertisers pay Yahoo! a fee when Internet users click on the ads.” What? Umm… won’t their ads be, you know, irrelevant (at least from a marketer’s standpoint) once folks stop using Yahoo! to conduct search?

Two fairly smart folks, Anne Zelenka of Anne 2.0 and Steve Rubel of Micro Persuasion, took opposite viewpoints on this one; Anne says it’s all good, while Steve basically loses his mind and says, “Screw ’em.” As compelling as Anne’s argument is, I have a tough time agreeing with her overall. I think she’s right, in that companies can thrive in a knowledge economy by staking out its territory along the fringe (which vaguely echoes the old Reis and Trout positioning mantra, too). Additionally, I think she’s taking a look at the broader picture and looking for alternative forms of success. Admirable, though I’m not fully convinced that that’s the right way to go on this one.

Steve’s probably gone around the bend on the other side, but I think he’s closer to the fact on this. Except for one thing. To his comment, “I have no interest in using a product that the company doesn’t aspire to make best of breed,” I ask one question: what kind of cell phone do you have? ‘Cause pretty much all of them in this country are pretty lousy. Anyway, I do think that Yahoo! is taking an odd approach on this one and is going to hurt themselves in the short term. It does make me wonder what they’re up to in the longer term. And, drawing on Anne’s advice one more time, it might be worth some deeper, more reflective thought.

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

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  1. I think I overdid the underdoing a bit. There’s great value in competing and aiming to be better than everyone else–we get better services and products that way. But deciding to use only “best of breed” services doesn’t make sense to me. If the number one offering suits your needs, use it, but if another one fits better, what does it matter whether the company is gunning for number one or not? It’s not like use of one particular search engine ties you in and leaves you adrift if that search engine should later go under.

    Anyway, thanks for the mentions. I’m enjoying your blog too… you have a really nice clean design here.

  2. As always, you raise an interesting point here, Anne. I can’t take credit for the idea (I heard one conference or another last year), but few companies have ever enjoyed the market capitalization that Google does when the cost incurred by their customers switching to their competition is effectively zero. To your point, anyone can move to another search engine at any time. How do you think Google’s shareholders would feel if, for instance, Yahoo suddenly hit upon a better algorithm (or more likely, leveraged the tagging and aggregation inherent in Flickr and that suddenly drew everyone away from Google? I think the Web has taught us one thing more than ever: Getting to number 1 is one thing; staying there is quite another.

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