Why Yahoo’s Next CEO Should Be From NYC, Not the Valley

On more than one occasion last year, former Yahoo CEO Carol Bartz and her chief product officer Blake Irving had trouble defining what Yahoo actually is in a concise, articulate fashion. It was a media company, a communications platform, a set of experiences, a collection of tools, a feeling, etc.

The next CEO better figure out quickly that Yahoo is a media company — and a very successful one at that. Yahoo has been trapped in a five-year-plus malaise suffering from Google envy. Media is its bread and butter, not tech. Thus, the company needs to focus its CEO search in New York — or maybe LA — but not the Valley.

Bartz, for all of her cost-cutting and operational streamlining, had no real media background or feel for it. She focused far too much on tech product, hanging onto Yahoo’s Sililicon Alley heritage instead of seeing what was right in front of her. For example, what is Yahoo doing still putting any money towards search when it outsources its technology to Microsoft? That game is over, and frankly has been for going on a decade. Time to let go. There’s a reason engineers don’t want to work there anymore.

On the media side of things, Yahoo publishes the top one or two sites in most major content categories on the Internet in the U.S. Yahoo Finance has been the top business and financial news property for 43 months in a row. Yahoo Sports, which regularly challenges or beats ESPN.com in traffic, just broke a massive story on the University of Miami which shook college sports at its foundations. Yahoo Entertainment, the gossip site OMG, Yahoo News — the list of winners goes on. In video, Yahoo may be even more successful. The company claims to be responsible for nine of the top 10 series on the Web. And it just unveiled a new slate of advertiser-friendly shows.

So how can a company that delivers such huge audiences struggle so mightily? One reason is that somehow Bartz allowed Yahoo’s ad sales to languish, which is pretty much unforgivable for a media company CEO, which she apparently never saw herself as.

Of course, it’s not enough to have a fully stocked sales staff. Yahoo’s content is not viewed as dynamic or engaging enough. Nor is its audience valuable from a social or ecommerce perspective.

“Yahoo’s relative failure is in the monetization of its audience,” said Rob Norman CEO North America GroupM. “The numbers remain huge and widely distributed but there is relatively little in the character of those big numbers that makes the inventory ‘must buy’ at a premium to network inventory.”

Yahoo’s content lacks character. Some might argue that point, but the ad community has long suggested that Yahoo is good at building a drive-by users funnelled from Yahoo Mail accounts. The company lacks “the experience amplification of a Comcast NBCU, Viacom or Conde Nast,” observed Norman.

So why not look to those companies to find your next CEO? A programmer. An editor-in-chief type. An arbiter of taste. if the company can’t reduce its cost structure or demonstrate to advertisers that its audience is inclined to be more transactional or social, it needs to prove to the market that Yahoo can amplify experiences.”

Could they lure ex Viacom CEO Tom Freston? Is Michael Eisner available? What about ex-ABC programming chief Steve McPherson? Could Bonnie Hammer be pried away from Comcast NBCU? Maybe not, but bringing back someone like former Yahoo Sports editor in chief Dave Morgan to take on a more prominent role would be a start? Or what about buying a company like Buzzfeed and giving Jonah Perretti a more prominent role?

Of course, some note that TV and Hollywood executives have not proven to work on the Web. Lloyd Braun and Randy Falco come to mind. Rob Peck, head of Quasar Capital Advisors argued that while the next Yahoo CEO must have media chops, he or she must be versed in digital technology, and able to see around corners.

“I partially agree with this theory,” he said. “But Yahoo is still a technology company. They need someone who is very aware of the current online trends toward more transactional media.”

Peck cited Zynga and Groupon as examples. But isn’t Yahoo’s strength in brand advertising, not transactional stuff?

“I don’t think it is that simple,” said Peck. “If you talk to advertisers and agencies, they are tired of the waste [online and on TV]. They idea that you can just say, ‘ok, let’s buy a big billboard on Yahoo,’ that’s not enough. They need to be able to prove some sort of ROI, beyond just some brand lift.”

Peck’s suggestion? David Rosenblatt, the onetime CEO of DoubleClick who previously ran display advertising at Google. Someone like Rosenblatt knows how advertisers think, and knows the underlying technology in online advertising. “He’s someone who could help Yahoo think about the next three years, not just this year,” said Peck.

Or Yahoo could go big, bite the bullet and outbid Google for Hulu. That would solve a few problems at once. Yahoo would gain that “character” content, it would have an executive in Hulu CEO Jason Kilar who knows both product and advertising, and it would give the company a purpose as a digital media company.

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