Yahoo Company Overview:
Yahoo is an American web services provider headquartered in Sunnyvale, California, and owned by Verizon Media. The company was founded by Jerry Yang and David Filo in January 1994 and was incorporated on March 2, 1995. Yahoo provides a variety of services including a search engine, digital content such as news, weather, and sports, online mapping, video sharing, fantasy sports, and online advertising. Today we are going over Porter’s five forces model analysis of Yahoo.
Yahoo Competitive Rivalry:
The competitive rivalry within the industry is high as there are numerous companies offering similar services, including Google, Microsoft, and AOL. The competition is intense for market share as well as for advertising revenue. In the advertising market, various companies aim to serve the same clients in a similar manner. Thus, competition in this industry is extremely high with many players offering very similar or exactly identical products and services that increase rivalry. The competitive rivalry within the industry is high as there are numerous companies offering similar services, including Google, Microsoft, and AOL. The competition is intense for market share as well as for advertising revenue.
Yahoo Bargaining Power of Buyers:
Buyers have high bargaining power in digital advertising platforms. Media buyers represent large brands looking to advertise their products and services, thus possessing huge negotiating power over small publishers. Prominent positions of media owners in this market also add to increased competition among advertisers. This means that Yahoo is likely to face pressure from clients who want it to offer more attractive rates and services.
Yahoo Bargaining Power of Suppliers:
Over the years, Yahoo has continuously used influencers to promote its products and services. This relationship is beneficial for both parties, but it gives high bargaining power to influencers over Yahoo’s business decisions. Influencers can put pressure on Yahoo not just to provide them with better products and services, but also to pay higher for their endorsements.
Yahoo Threat of New Entrants:
Existing players operating in the digital advertising market are entering into partnerships with various startups that aim to deal with this high competitive environment. These startups are often small companies existing outside the industry, offering unique value propositions to players like Yahoo. Thus, they have the potential to become a threat if their services are offered for free or at very low rates.
Yahoo Threat of Substitutes:
Social-networking sites and blogs feature as substitutes as they also offer platforms for digital advertising as well as social connections with other users. Social-networking sites like Facebook and Twitter are currently experiencing major growth in users, thus becoming a major substitute for Yahoo. This means that these sites will soon replace the main source of revenue for many companies like Yahoo.
Yahoo Porter’s 5 Forces Conclusion:
The digital advertising market is characterized by high competition, with players like Yahoo having to offer better terms and services to clients. This has a negative effect on profitability as a result of high costs. Among the five forces, the threat of new entrants is highest for this industry as it can be easily supplemented by external players who enter due to lucrative pricing models. Yahoo’s unique value proposition lies in its unique products and services that are not available elsewhere. It must work towards strengthening its portfolio in order to retain customers. The bargaining power of buyers is also another important factor for this industry, as influencers have the potential to put pressure on Yahoo’s business decisions. Thus, it is essential for the company to maintain long-lasting relations with these influencers and clients.