Yahoo’s Competitive Advantages

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Yahoo has grown to be one of the largest tech companies in the world, competing with other internet giants like Google and Facebook for advertising dollars. How did Yahoo grow to such an immense size? It’s useful to understand Yahoo’s competitive advantages when assessing its future growth potential. In this article, we break down the three main factors that have driven growth at Yahoo: branding, capital investment, and decision-making flexibility.

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Yahoo's Competitive Advantages

Yahoo’s Business Model

Yahoo boasts a diverse set of competitive advantages. The most important is its user base: Yahoo ranks as one of the world’s 10 most popular sites, with more than 700 million unique visitors and more than 1 billion page views per month in 2013. More importantly, Yahoo has developed a solid reputation for serving as a hub for information—most notably through search queries—and it has managed to consistently draw users back to its site by offering apps that are directly related to searches, such as weather reports and news feeds. These relationships between Yahoo and users make it difficult for competitors to lure them away. However, there are some weaknesses in Yahoo’s business model that may impact how successful its long-term approach will be.

List of Yahoo Competitive Advantage

High brand recognition.

Large existing customer base.

Able to attract the most talented workforce. 

The distribution of Yahoo’s products is high and growing. 

Limited product differentiation among major competitors Yahoo has several key competitive advantages in their industry, including a large and growing customer base, broad distribution channels, multiple revenue streams, and a very established brand name. These advantages will allow Yahoo to increase its market share for years to come.

Strong investor backing Yahoo enjoys strong financial support from investors and stakeholders. These backers include Li Ka-Shing, Softbank, Alibaba, Silver Lake, and some of these large firms that have acquired important stakes in Yahoo. Yahoo has limited product differentiation among major competitors Yahoo is challenged by a lack of feature differentiation among its competitors, especially on mobile devices. Many services offered by other Internet portals such as Google and Microsoft are free or nearly free, while Yahoo’s products offer additional features at a cost to users.

Strategic partnerships Yahoo has forged several strategic partnerships over time, including with Apple, Bing, and Microsoft/Bing. These partnerships allow Yahoo to enhance its products at a reduced cost to itself. Yahoo is challenged by competition from other major Internet portals such as Google, Amazon, and Facebook Yahoo’s biggest threat comes from powerful competitors in their industry like Google, Amazon, and Facebook. 

These companies offer users similar products for free or nearly free that often have greater functionality than those of Yahoo. Yahoo will continue to face increased pressure from competitors as each company tries to gain market share in search, display advertising, and mobile devices. Yahoo is a technology company, but there are limited barriers that prevent new entrants into their industry. Yahoo lacks many barriers which would deter potential entrants into their industry because they don’t sell directly to consumers or own any patents that could block competitors from entering the market.

Yahoo Rivalries

Every company has rivals, and Yahoo is no exception. Yahoo competes with several of its product offerings. For example, Yahoo Mail has plenty of competitors that offer free email services; Yahoo Finance competes directly with AOL’s financial news page, and Flickr offers something much different from Google’s Picasa photo-sharing site. Yahoo also faces two huge rivals in Microsoft and Google: Both are larger companies with bigger brand recognition than Yahoo (though Yahoo might argue it has a higher-quality brand). And both Microsoft and Google have invested in competing products to make them more competitive against Yahoo, either offering similar products or counter-offering direct competition. Though Yahoo might not be on an equal footing with these tech giants, it isn’t without some competitive advantages.

Yahoo Can Do Better

As a company, Yahoo has been struggling to keep up with its competitors for some time now. It’s not a stretch to say that Yahoo has fallen behind its competitors in certain areas. However, Yahoo is still a popular search engine and it can still compete with Google for search engine traffic. Let’s take a look at some of Yahoo’s strengths that will keep it in contention with Google. One advantage Yahoo has over Google is Yahoo Answers; many users use this question-and-answer feature when they don’t know how to solve a problem or find an answer online. This feature helps attract users from all over. Another advantage Yahoo has over Google comes from its partnership with CBS Sports; both companies are working together as content providers for Xbox 360 live television services.

Conclusion

Yahoo has competitive advantages in three core areas: its talent, which is unique and strong; its distribution network and access to content, which are second to none; and its global presence. Yahoo’s goal is to ensure that it does everything possible to take advantage of those advantages as it builds for growth in an increasingly competitive industry. In some respects, Yahoo needs to build a whole new business—one focused on mobile devices and native advertising—which makes a diverse team more important than ever.

FAQ’s Section
  1. What is Yahoo’s competitive advantage?
  • Yahoo has a competitive advantage in its brand recognition. More than one billion people have access to Yahoo and its network of more than 5,000 properties across 50-plus countries and territories. For example, more than 1 million subscribers visit Yahoo India’s digital media platform every month, according to Nielsen’s Indian Digital Viewers data. 
  1. What does Yahoo produce and how does it generate revenue?
  • Yahoo offers a variety of products and services, including Yahoo Mail, Yahoo Finance, Flickr, Tumblr, and Answers. Yahoo generates revenue through three streams: display advertising; performance marketing; and fees earned on other services. In 2017, its revenue was $4.8 billion in comparison to $5.3 billion in 2016.
  1. Why might Yahoo’s business change over time?
  • As digital advertising and communications continue to shift, Yahoo is working to provide more innovative services to ensure it remains a leader in its industry. For example, one of Yahoo’s current initiatives is a partnership with Verizon that combines Yahoo and AOL into a single company. If consumers are willing to pay for online media, then Yahoo will have more opportunities to generate revenue through performance marketing and other services.
Yahoo’s Competitive Advantages

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