And the key difference between the two companies centers around mobile: Mark Zuckerberg's figured it out at Facebook, while this remains the proverbial work in progress at Yahoo. So maybe CEO Marissa Mayer should look to the social network for guidance.
A year ago, suggesting that anyone look to Facebook as a mobile role model would have been met with a laugh. But oh what a difference a year makes. Both tech giants beat Wall Street's forecasts, but for Facebook, it was the continuation of an upward trend. Facebook has been throwing around the buzz-phrase "mobile first" since before its market debut in 2012, when would-be investors became spooked about how the company would ever make money from smartphones. Now, the company can don the "mobile first" title in good conscience: This past quarter, for the first time ever, the company made the majority of its ad revenue -- 53 percent -- from mobile advertising.
You'd think that would be the reaction, given the relentless scrutiny from the press (myself included) every step of the way. But we've got to give Zuck and Co. a lot more credit than that. The company made a meaningful leap in mobile sensibility relatively quickly.Yahoo, on the other hand, is still trying to figure it out. The company has staffed up its mobile team to almost 400 people, and has upped its mobile design chops considerably. But it still hasn't cracked the code on monetization, and the company has not reversed its slide from advertising revenue this quarter.
In some ways, it's unfair to compare the two companies. (For one, Yahoo is twice Facebook's age, and has a ton of legacy problems to boot.) But, in terms of mobile ambitions, the two companies have some striking similarities. In the modern tech industry, every firm is racing to win at mobile, but Yahoo and Facebook have become the poster children for the chase. Both companies started focusing on mobile in earnest around the same time -- Facebook prior to its initial public offering in 2012, and Yahoo when Mayer took the helm in July that same year.
Both of the companies also have embraced fragmentation as the key to mobile success. To Yahoo's credit, it was the first of the two to embrace that strategy. Yahoo has been pouring money and man hours into fresh apps likeand , both of which have been favorably received. Facebook last year went all in on Home, a bizarre software bundle for Android that never took off. The company has recently reversed course. Instead of trying to take over an entire phone, the idea is to create a posse of standalone apps. The company on Thursday the first fruits of this strategy, a slick news reader app called Paper.
But, as we've seen time and time again in the tech world, first isn't always better. (See Apple and MP3 players.) In fact, Facebook was able to fix its mobile ad woes specifically because the experience wasn't fragmented early on. "The Facebook experience, without them realizing it before the IPO, was tailor made for mobile," said Clark Fredricksen, vice president of research firm eMarketer. It's a single column feed that translates well across devices. Because of that universality, it made it a little easier to learn the nascent mobile ad game on the fly. "You have a billion-plus people accessing the same app, using it the same way, same platform -- all these people are viewing a similar collection of ad products," Fredricksen said.
Once you've got that down, then you can move on to creating more standalone apps. In an environment where everyone is trying to figure out the uncharted territory of mobile ads, Yahoo didn't have the benefit of learning on an ad-friendly platform like Facebook's news feed. So, for Yahoo, skipping ahead to standalone apps hasn't made the organic process of dreaming up appropriate ad units any easier.
For his part, Zuckerberg seems to recognize the company's advantage in hindsight. The shift to mobile was "not as quick as it should have been," Zuckerberg told Businessweek. But "one of the things that characterizes our company is that we are pretty strong-willed."
What also certainly hasn't helped Yahoo is the tenure of COO Henrique de Castro, the company's top adman, who wasafter a little over a year on the job. Most tellingly, in 2013, Yahoo lost its spot as the No. 2 digital ad seller in the United States behind Google, when Facebook took its position for the first time, according to eMarketer. At the Consumer Electronics Show earlier this month, Mayer introduced a new advertising exchange to consolidate Yahoo's ad offerings.
There are, of course, other bigger-picture things at play. The ad situation "speaks to the overall health of both properties," said Rebecca Lieb, an analyst who covers advertising and media for the Altimeter Group. On top of the mobile conundrum, which has plagued most every tech giant, Mayer has to deal with Yahoo's legacy problems: bloat, culture, structure, and all the other things that have made the entrance to Yahoo's CEO office a revolving door. Lieb says the company has an identity problem similar to MSN, another Web portal that doesn't know what it wants to be.
Because mobile advertising is still so new, no matter how clever your ad units are, if you can't do a good job of convincing marketers to give you money, then you are sunk. In that case, Facebook holds the billion-user trump card. Facebook also knows a whole lot more about those users than a lot of other companies, and that's clearly what Yahoo is striving for with its new mobile properties. Yahoo would be wise to watch Facebook carefully, to see how it monetizes its coming fleet of standalone apps. For now, Yahoo doesn't have any trump cards of its own in sight.