As Amir Efrati wrote recently in the Wall Street Journal, social-networking giant Facebook grabbed a major share of on-line advertising marketing while Yahoo Inc. just stood by and watched.
Finally, Yahoo has decided to use some of the most popular and effective of Facebook’s marketing tools – the “Like” and “Share” buttons. Yahoo has placed the buttons on their news and sports websites to give their contacts a chance to share articles with their contacts on Facebook.
Yahoo, like other providers of content, is trying to leverage Facebook’s gigantic user base to draw traffic back to Yahoo after readers have clicked the new buttons. This new click strategy also ensures that links to Yahoo appear in the Facebook search feature. Yahoo is also using a similar strategy with Twitter Inc., the Internet messaging service, and Zynga Game Network, to offer online social games.
Yahoo’s expectation is that these moves will solve its biggest problem, which is that it’s traffic share has dropped 10% in the time users spend per month on Yahoo sites. This information was garnered from the research firm comScore that showed more customers landing on Facebook than on Yahoo.
“’Frenemy’– part friend, part enemy– is where Yahoo finds itself with Facebook,” said David Karnsted, a former senior vice president of North American sales at Yahoo and currently chief executive of online marketing firm Efficient Frontier.
Karnsted said that the “enemy part” is that Facebook’s ad business is big and growing even faster, sometimes even at Yahoo’s expense. “The friend part is that Yahoo has stopped trying to get people not to go to Facebook and decided it was better off enabling that, largely because it didn’t have a real choice,” he added.
Dan Rose, Facebook’s vice president of partnership and platform marketing disagreed with the term ‘frenemy’. “That implies more enemy than friend,” he said.
There’s no question that they are competing. In the U.S. display ads, a market that reached nearly $9 billion in 2010, Yahoo was number one. That looks good until Yahoo saw that their market share dropped from 16.5% in 2009 to 16.2%, according to research firm eMarketer. Meanwhile, second place Facebooks’s share rose to 13.6% from a mere 7.3% the year before.
“They are a partner and a good one at that,” said Mike Kerns, Yahoo’s vice president of social, games and personalization. “We view them and their platform as a great opportunity to both distribute Yahoo and its partner’s content” and “to enhance user experience” on Yahoo.
In the meantime, Yahoo is developing ways to help users stay connected with small groups of people that really matter to a person rather than Facebook’s vast network of friends that includes work colleagues and casual acquaintances.
Yahoo sees a venue to provide technology to online content providers such as newspapers so that they have better control of how users find and interact with their content, rather than leaving such searches to Facebook and others.
As an example, recently Yahoo began a public pitch to magazines and newspapers offering the use of its software to reach users of tables like the iPad with features such as glitzy interactive graphics and photos. At that time Yahoo didn’t mention any partners.
Perhaps the word ‘frenemies’ is the correct connection between Yahoo and Facebook after all.
