11:11 AM

Yahoo Media Group reorganizes to monetize major brands - with or without permission

Yahoo's top media execs came up from Santa Monica Tuesday to Yahoo HQ to present a new strategy for monetizing audiences of major entertainment brands such as TV's "Lost" and Nintendo's Wii.

Vince Broady, head of Games and Entertainment, Scott Moore, head of News and Information, and David Goldberg, head of Yahoo Music, presented their strategies at a lunch event for top media.

One of their largest initiatives is "Brand Universe" which pulls together Yahoo users in message boards, Flickr photos, Yahoo Groups, and other Yahoo sections into one location. This makes it easier to sell advertising because of the larger aggregated numbers.

Vince Broady, is in charge of Brand Universe. "We will pick 100 of the top entertainment brand names and highlight and promote those brands on Yahoo. We will work with the brand owners but we can do this even if some companies don't want to work with us."

Mr Broady said that Yahoo already knows what TV shows, music, films, games, game consoles will likely succeed, and which brands have momentum just from studying its users. "We saw very early on that Nintendo Wii would do well and so Wii became the first brand that we rolled out as part of Brand Universe."

David Goldberg from Yahoo Music said, "We can tell with 100 per cent accuracy which songs will fail within seven days of their release."

Yahoo said it would share its "Yahoo Pulse" data on which brands are doing well with brand owners because it would help them craft their content for broader commercial appeal.

Foremski's Take: It's a savvy move for Yahoo and a big change from organizing around broad generic properties such as Yahoo Finance, or services such as Yahoo mail. Yahoo's reach is such that it can create a dominant online site around a brand with a ready made community--just from pulling together it's users and their interests,  from various sections of Yahoo.

For example, people tag their Flickr photos with a band name, they discuss a band in Yahoo message boards and in Yahoo Groups, and they watch band videos in Yahoo Video. Now, Yahoo can aggregate all those people and sell them to advertisers who are always looking for the largest relevant audience.

But there is a collision course ahead because brand owners will resent a third party making money off their brand, with or without them. Here's why: 

  • Yahoo is creating an online site that aggregates more of the brand audience than the brand owner can create. Yahoo controls the online presence  of a brand, especially since its search engines can point to its properties. 
  • Yahoo is getting a free ride. Usually the brand owner, for example, the producers of the TV show "Lost" sell to TV networks who then monetise that content by selling advertising around it.  Yahoo doesn't have to pay a penny to "Lost" because it is monetizing Yahoo users who are interested in "Lost." Advertisers don't care, they are buying an audience with a demographic--the larger the better because of the benefits of scale in marketing messages.
  • Yahoo doesn't have any loyalty to the brands. If they start to fall away and drop out of the Top 100 and Yahoo latches onto the next rising star.
  • Yahoo doesn't have to invest in building brands and taking a risk on which will be successful--as TV networks do when ordering pilot series. Yahoo can potentially aggregate and sell a larger audience around a TV show than the TV networks. Because online advertising is trackable, ROI is increased which means more advertising money will go online than to TV and elsewhere. So then TV networks have less money to pay the content producers.

So who pays for creating the content of a brand and building it up?

So what if Yahoo is helping to build brands through its online activities, and traffic to a brand's websites increases?

More online traffic doesn't mean anything if you can't monetise it. And Yahoo can monetise online traffic much better than the brand owners whose business model is selling content.