Exposing Yahoo's Strategy Through Flickr And Startup Acquisitions

How the new Flickr reveals Marissa Mayer’s real plan to turn around the Internet giant.

There are three levels to Markus Spiering's love of Volkswagens. The first is in his garage: He owns a 1977 VW Campmobile and a 1972 VW Karmann Ghia sports coupe, which he restored inside and out. The second is on his hard drive: He loves taking photos of other VWs--fitting, given that he's the German-born head of product for Flickr, Yahoo's once-neglected and now-resurgent photo service. The third--and for his employer, perhaps the most important--appears in the acclaimed app that his team released late last year. It's clearly visible when he flips to the app's Group tab, bringing up a list of the nine VW groups that count him as a member, from the geeky "Analog VW Aircooled" to the more-inclusive "Volkswagen Beetles/All VWs."

Within Spiering's obsession and devotion lie the seeds of Yahoo's turnaround strategy. CEO Marissa Mayer has been deliberately vague in her pronouncements about the company, opting for opaque mission statements such as "Yahoo is about making the world's daily habits more inspiring and entertaining." After spending time with the team behind the revitalized Flickr and analyzing moves Mayer has made, one gets the sense that the future of Yahoo is hiding in plain sight. If Facebook's value is in cataloging everyone you know personally, and LinkedIn owns your relationships with all your professional colleagues, Mayer wants to create a complete profile of everything you love, which will result in more personalized content--and more lucrative ads surrounding it.

This ambitious gambit has been tried unsuccessfully many times before, and she's entering into competition with the likes of Pinterest, Tumblr, and Twitter. But if Facebook's social graph, as the techies call it, is worth almost $70 billion in market cap, what would Yahoo be worth--to advertisers, investors, and, of course, users--if it can build the "interest graph"?

Flickr's revamp sheds light on how Mayer and Yahoo plan to use their product strategy to chase this ambitious goal. At first glance, the photo service's much-needed mobile upgrade could be mistaken for an Instagram clone. But it is not about filters or sharing. "Flickr stands for photos," says Spiering, and photos, when they're divided into more than 1.6 million hyperspecific interest groups, reveal what you love. The new iPhone app is designed to get users uploading their interests to Yahoo again (and then sharing the images elsewhere), to create an experience good enough that users will return to Flickr daily. Make no mistake: Daily is the most significant word in Mayer's mission statement.

After the new release, users uploaded 25% more photos to Flickr. But perhaps even more important, they increased their interactions with those photos by the same amount. "That cycle of user behavior is really what we want to accomplish," says Adam Cahan, whom Mayer tapped to be Yahoo's SVP of mobile and emerging products, reporting directly to her.

Flickr was the first interest-based property that Yahoo tackled because it was the most extreme example of a product users wanted to love again. But Mayer is sitting on a trove of products that her predecessors mismanaged, neglected, or even abandoned. Groups, a hub for users to congregate based on shared interests, hasn't been updated in more than 10 years. Yahoo has areas devoted to such advertising-friendly cash cows as news, sports, finance, movies, and games, and each one already offers users an opportunity to experience the content their way. My Portfolio creates a dashboard of stock holdings and news about them; My Travel catalogs the places you've visited and provides deal alerts.

Now it's a matter of harnessing all those disparate areas. In February, Yahoo launched a news feed on its mobile and desktop home pages that analyzes user behavior in order to promote the most relevant content. Along with an infinite scroll, the stream adds sharing options to each story--yet another way for users to express their interests. "What you need to be successful in the land of personalization is users investing in us, giving us more and more of their interests," says Cahan, "but then also having ways for us to provide [more and more of their interests] back to them."

Cahan joined Yahoo when the company, under former CEO Carol Bartz, acquired his startup IntoNow, a service designed to connect users around the TV shows they watched and loved. Mayer's acquisition strategy thus far has been to find other design-savvy, mobile-first technologists, like Cahan, who are obsessed with mapping users' interests.

The first app Yahoo acquired under Mayer's watch, Stamped, kept track of restaurants, books, movies, and anything else users liked. Another, Snip.it, clipped and shared news articles in a Pinterest-like format. And a third, Alike, made restaurant recommendations based on users' previous preferences. In a statement after Yahoo acquired Snip.it, Yahoo's VP of product, Mike Kerns, revealed exactly what Yahoo has in mind when he said, "They will help us build experiences that bring people with shared interests together." (All three apps were shut down following their acquisitions.)

Mayer's strategy makes perfect sense, but it's also rife with challenges. Her team has to figure out how to translate very precise, user-defined interests into advertising opportunities, and it has to present them on mobile devices in a way that doesn't alienate users. Yahoo knows Spiering, for example, loves VWs, but that doesn't mean he wants to buy a new one. So what's the ad to serve him--and where?

One thing is clear: People both inside and outside the company have faith in Mayer to pull it off. "I think people do want to interact with Yahoo," says Neil Doshi, an analyst at Citigroup, even after citing data from Citigroup and comScore that shows Yahoo's share of Internet users' time has dropped from 14% in 2006 to 7% today. Doshi's bet is that Mayer's vigilance will turn the tide. Or as one Yahoo mobile engineer put it, "She's given everybody a sense of hope."

Flickr head of product Markus Spiering uses the site's interest groups to pursue his love of VWs, like this one from his photo stream.

[Photos courtesy of Getty Images; World Economic Forum, Miko Reis (center)]

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3 Comments

  • Rippie

    Well, after the Sandbagging of Flickr on May 20, there is some serious doubt about how well MM has planned to bring legacy users loyal to Y! properties along for this new ride.

    The big gamble, the one that may crash and burn, is that the people with the most detailed, long term and intricately webbed interest trails on Y! properties are Flickr users who've been there for years and been actively uploading, presenting and interacting with content.

    It is the interaction in which the richest inferences for personal data can be made... and it is in the interaction that MM's upheaval in the relaunch of the "new" Flickr has failed greatly, substantially damaging the site nearly instantaneously with reduced views, reduced drilling down into people accounts, and reduced activity in groups... save for grousing about the damage being done to the site by the relaunch.

    If Flickr represents the direction in which things will move... flashier, crowded, confusing and illiterate, while demanding enormous bandwidth speed and monthly allowance by users, Yahoo! are going to be in very serious trouble by year's end, and I think there is every possibility, without much fancy footwork, that Flickr could be shuttered within two years based on this relaunch... or would have to be rebadged under a new name.

  • DaBigG

    So -- I used to use Yahoo a lot and it got to be so aggravating with the distracting ads and stuff I gave up. It was also ugly. I just went to the site and it is still ugly and difficult to navigate. It looks like a cheap imitation of Google with garish colors and ludicrous iconography. Yahoo needs a cultural shift and a new interface paradigm. I am not sure if this well happen.