Yahoo scraps mail ads in emerging markets

February 19, 2009

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.

(Photo: Reuters)


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People are sick to death of ads, period. We are inundated every day with them in every conceivable place. Our TV shows are crammed with them, our magazines have more ads than content, and the internet has become nothing more than one huge advertising vehicle. People (like myself) dropping Yahoo mail for another email system that has fewer, less intrusive ads (and not because of a slow connection!) is just one symptom of a very large problem: the public is utterly disgusted with being completely drowned in advertisements 24/7. It has gotten to the point now where I personally will go out of my way NOT to purchase something if I see an ad for it just because of the anger I feel over being subjected to this garbage day in and day out. Advertisers need to realize that there is a breaking point; a point where the ads no longer have the intended effect, but instead have the reverse.

Posted by Claire | Report as abusive

I remember years ago when I LOVED yahoo email since it was free and worked with my old browser. Then they started putting on their crazy ads with LARGE MOVING pictures of “beautiful” women, cars, etc. Because of all the ads, it would take me 5 webpages just to be able to get to read my email as well as give me a huge eyesore as well as waste my time, energy, time, and bandwidth on slow dialup!!! I ran away SO FAST and went into the WONDERFUL ARMS OF FASTMAIL (I don’t like advertising just any service, but fastmail is one of a kind excellent) who does AWESOME service FOR FREE VS. the mentality of yahoo who just wants to use you. I’d find my yahoo email spammed with ads from businesses I never dealt with just because yahoo was able to track me with their search engine PLUS their email. They were so bad they even interefered in your privacy. They’d even LOOK at your email to see what you were interested in and serve you ads from businesses related to your email info. These days, yahoo doesn’t have so many ads but I only use them as a temporary measure for meaningless stuff. They’re NEVER going to be my DEFAULT email again for communication with friends/family/business!! That’s for sure!!

Posted by Sue | Report as abusive