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Thursday, March 06, 2014


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Yahoo's CEO, Marissa Mayer, gave an extraordinary interview to The New York Times last week in which she said that magazine pages were better for advertising than digital space.

Referring to Vogue and InStyle, she said "The ads in those magazines are as interesting as the photo shoots and the articles." She added, for good measure, "I miss the ads when they are not there. I feel less fulfilled."

This says, I suspect, something about her own reading habits. Mayer, in the picture accompanying the interview, is wearing Oscar de la Renta, a favorite of Vogue and its editor, Anna Wintour. (Vogue lavishly profiled Mayer in August wearing Michael Kors.) But it also says something about the nature of advertising, a business that is key to the company she runs, but one that she does not seem to know all that much about.

Putting aside that magazine advertising is in radical structural decline — hence, probably not what you want to emulate — high-end glossies specialize in the kind of brand and image advertising that is pretty much absent from most online venues, and certainly from mass market portals.

What exactly is Mayer's point?

Not, I'd suppose, that advertisers ought to return to magazines. Possibly that she'd like to see lots of fashion and luxury goods advertising on Yahoo, not a probable outcome.

More likely, she's voicing a general digital angst that Web and mobile advertising ought to somehow be something that advertisers want to pay more for. More integrated, more compelling, better at making people want to buy stuff. The example Mayer cited was Knorr, the dehydrated soup mix packets that are now advertised on Yahoo in space adjacent to Yahoo Food, something described as a "digital magazine," recently launched by Yahoo. (In general, the intermingling of ads like this with content is less about showcasing product than an effort to confuse Yahoo users with what's an ad and what's not an ad.)

Mayer, a technologist who made her career and fortune at Google, might perhaps be forgiven for not understanding the disconnect between Knorr and Vogue and Oscar de la Renta. Yet, of course, the subtleties of advertising and media, much more so than difficult algorithms, are now her primary responsibility.

Seldom has a CEO of a large company sounded so maladroit as Mayer does when she talks about her company's strategy in its core business.

Nor has justice been done to the company's failure in these areas. It's not just the ever-steady decline in its performance as an advertising-based company (many CEOs before Mayer have gone to the gallows for this). There's seeming total chaos among Yahoo's marketing and sales executives. In January, Mayer fired the company's top ad executive, Henrique de Castro, after just 15 months on the job, costing the company more than $100 million in severance. Mayer said she will lead ad sales efforts herself.

This is a peculiar, even ludicrous, state of affairs that goes on because most of Yahoo's value is not in its core business, but in its holdings in Alibaba, the vast Chinese e-commerce company. People invest in Yahoo to invest in Alibaba; the fact that they get a stumblebum enterprise in the bargain is of minor concern.

Mayer herself — in Vogue, in a recent profile in Vanity Fair, and in her recent Times interview — tends to get the benefit of the doubt, because Alibaba is holding up her stock price, because she once worked for Google and is otherworldly rich herself, and because, well, Oscar de la Renta probably helps.

Yet, the existential predicament continues: Yahoo, as an operating company, is a failed business.

There is, too, a much larger, perplexing question: How do you create advertising-supported businesses in which advertising doesn't seem to work all that well?

This is a mighty digital conundrum that is always clouded by Google's success. While Google's dominance is in advertising, it is not as a media company, but rather as a middle-man connector (in the great days of direct-mail advertising, Google would have been more like the post office). Everybody else, on the other hand, is for all practical purposes, in the media business — that is, having to create a propitious environment for seller to meet buyer (an exciting and commodious enough environment for buyer to seduce seller).

In this, there are two major hulking digital disaster areas: Yahoo and AOL. There are all of Microsoft's failed efforts with consumer media. There are countless content sites with ever-falling advertising rates. Then there are the digital ad behemoths, YouTube and Facebook, each with per-user revenue an increment of traditional media's.

The problem in a sense begins with the optimism or hubris of technologists who thought advertising was largely a problem of efficient connections instead of emotional connections. Marissa Mayer reads a magazine and thinks, why don't we do that? Easy breezy. In a sense, it is just a lack of obvious skill sets: You ought to have sold advertising before taking over a company whose job is to sell it. And, in another sense, it is structural; digital media has a fleeting and shallow effect on people.

Mayer is right. Magazines look pretty good.