Yahoo! has just announced a major restructuring of its organisation and management in an effort to regain some of the ground it has lost to search engine market competitors, such as Google and MSN.The third quarter profits of Yahoo! fell 38 per cent last October - news which may come as a surprise to some, since Yahoo!'s sales rose by 19 per cent in the months leading up to September. The feeling was that Yahoo! was not meeting its advertisers' needs quite as effectively as its rivals, and that product development at Yahoo! has been, comparatively, less effective.
This has led Yahoo! to a high-profile reshuffle - the largest the company has seen in five years. The new structure of the organisation will see it split into three groups, which will all report to CEO and Chairman, Terry Semel.
Mr Semel said that the "new structure gives us the opportunity to draw more fully on Yahoo!'s deep bench of talent," and that it will benefit the company by "increasing accountability, reducing bottlenecks and speeding decision making".
This is clearly a positive move on Yahoo!'s part, as it reflects - and acts - upon the tougher competition that the company faces in the online market. Additionally, it will hopefully go some way to making the company more adaptable and innovative. The three groups into which the company will be split are:
The Audience Group:
As the first of the customer focussed groups, this will take the success of Yahoo! as the most visited web page in the world and build upon it; hence it will try to enhance user-experience within the Yahoo! network. Yahoo! is likely to concentrate on social networking - a sector in which the company demonstrated strong interest when it purchased del.ico.us, as well as demonstrated in its plans to acquire Bix.com and its offer of $900 million for Facebook. Yahoo! claims that the company will "encourage every user on the Yahoo! network to participate in the consumption and publishing of information, and knowledge through tagging, reviewing, sharing of images and audio, and other social media activities." Yahoo! is currently looking for an experienced executive to head this group.
The Advertiser and Publisher Group:
This group will be headed by Susan Decker, who has served as the CFO of Yahoo! since 2000. It carries the aim of improving the way advertisers connect with their audience on the Yahoo! network. The company will build upon their previous experience in the field of search advertising and will also implement new technologies, such as the new paid search advertising platform, project Panama. This group is very important to Yahoo!'s business plan, as it is the one which will provide the monetisation of the online audience.
The Technology Group:
This group will continue to be headed by Chief Technology Officer Farzad Nazem; it will provide support for the other two by creating new search engine and online advertising technology.
This seems to be an aggressive plan on Yahoo!'s part, as the company is concentrating on its core strengths - search, media, online social communities and communications. And while it's a risky course of action, it must be seen as an evolutionary - and necessary - step for Yahoo! to survive in the increasingly competitive world of search engines.
