In the same week that Google revealed plans to launch a system that will allow publishers to charge for content, executive business channel MeetTheBoss.tv sat down with Yahoo's Jeff Russakow, executive vice-president of customer advocacy, to discuss consumer satisfaction and engagement - and how to monetise for the web.
According to reports revealed at the end of last week by Italian newspaper La Repubblica, Google will later this year launch an integrated payment system that allows publishers to use a single infrastructure for web, mobile and tablet to charge for their content.
The news comes hot on the heels of moves by News Corporation to buy the 61% of BSkyB that it doesn't already own, bringing the pay-TV operator completely into the fold: this, too, is matched by News International's (News Corp's main UK subsidiary) decision to place its newspapers behind pay-walls and begin charging online users to access their pages. The pay-wall debate is raging: the battle for online market share is raging too.
Reach is not enough
For Yahoo, which currently reaches 600 million users worldwide, plans to develop mobile apps to reach the 1.5 billion-strong handset market suggest that there is still potential to reach a huge audience. But, even with Eastern Europe, the Middle East and Southeast Asia offering 500 million new users in the next five years, reach just isn't enough.
"The first thing [to remember] is the good-old fashioned advertising model that says the internet is still in its early days and there's a lot more money to come over," explains Russakow. "Somewhere between 10% and 12% of total advertising is spent on online advertising and yet somewhere between 30% and 35% of consumer minutes are now spent online every night."
Online advertising is now rivalling television and has long passed print media or radio in terms of where the consumers are spending their time. It's a little like Mad Men - only on acid.
"Outside of that," said Russakow, "there is no question that the historical ideas of monetisation online and the advertising monetisation model as the only model have clearly been turned upside down."
Eyeballs and engagement
Russakow pointed to Google as a reference, sighting how the search engine giant currently has about 180 minutes per user, per month, accounting for $25 per user, per year. "If you look at Facebook" said Russakow, "they're almost twice that." In fact, Facebook currently sees 280 minutes per user per month. However, it is only making $1 per customer per year. That's a 25 times difference.
"Part of it, I'm sure, is that Facebook will close that gap by focusing on monetisation," suggested Russakow. "But the historical idea that eyeballs and engagement equals monetisation is clearly not true anymore. You've got search; you've got display; you have listings; you have social and more and more, as people are moving to mobile devices, we're seeing subscription models; people moving to content, apps, and loyalty programs. As a result a lot of the monetisation models that have existed in media for a long time are now starting to bear fruit online."
Less is more
That's all well and good. Facebook could be a killer if only it could monetise successfully - only it doesn't. But what for Yahoo specifically: has Google got the search market all sown up?
Russakow, perhaps obviously, says not. Yahoo economics are simple, he explains to MeetTheBosstv's Jonathan Spragg; and Russakow is aiming to deliver more, with less.
Already in the throes of an impressive cultural overhaul, Yahoo's new CEO, Carol Bartz, has called Russakow a "transformational leader". She said, "We need to do a better job of listening to Yahoo!'s users and advertisers and incorporating their feedback into our products and processes. In this critical role, Jeff will be instrumental in developing initiatives to improve customer satisfaction and loyalty, and he'll ensure that we're laser-focused on the needs of all our users and advertisers at every level of our company."
Yahoo already has 600 million users - now with Microsoft as a partner, a colossal advertising budget and Russakow to boot: the market place could be shifting gear.
To see the interview in full, go to MeetTheBoss.tv >>