Yahoo scraps mail ads in emerging markets
Getting rid of advertisements may not sound like a recipe to grow a Web business, but it’s one tack Yahoo is taking under new CEO Carol Bartz.
At a two-day staff powwow last week, Yahoo management decided to stop serving ads on its popular Yahoo Mail product in certain emerging markets in order to improve the experience for people with slow Internet connections.
The decision, which Bartz relayed to employees in her weekly memo last week, is intended to stem a loss of market share that Yahoo Mail believes it is experiencing in certain emerging market countries.
The move appears to be among one of the early nips and tucks the new CEO is making to Yahoo as she appraises the various aspects of the business and crafts a broader turnaround plan.
And it struck at least one analyst as a good sign.
Holding on to existing users is vital for any Web business, says Sanford Bernstein analyst Jeffrey Lindsay. A company can always figure out how to make money off the users later.
“What’s very encouraging is that Bartz is thinking about overseas users, because this suggests to us that she’s definitely considering growth strategies,” says Lindsay. “She could have gone the other way, and slash and burn.”
Yahoo Mail is the world’s second most popular free email service, with roughly 280 million users worldwide in December, according to comScore, compared to Microsoft’s 292 million Live Hotmail users. Google’s Gmail is a distant No.3 with 123 million users.
According to comScore, unique users of Web email grew 34% year-over-year in the Asia Pacific region in December and 33% in Latin America, while Yahoo’s growth rate in those regions was 5% and -2% respectively.
In the memo, Bartz said that Yahoo discovered it is losing market share in “many slower-bandwidth, emerging markets” and has decided to remove mail ads in those countries to improve the user experience.
“This will mean a drop in revenue for us but it’s the right thing to do strategically,” wrote Bartz.
The amount of revenue is unlikely to be significant to Yahoo, which generated $7.2 billion in sales in 2008, says Bernstein’s Lindsay.
Bartz also noted in the memo that the company is delaying the rollout of its redesigned homepage – dubbed Metro – “until we feel it will be a great product for all our users.”
Bartz did not say when the product will be delayed until. Tapan Bhat, Senior Vice President of Yahoo Front Doors, Communities and Network Services, said in a blog post on Friday that the company is wrapping up the first phase of “bucket testing” began in September.
“Bottom line is we’re getting closer to the final design, but we’re not quite there yet,” wrote Bhat.