Yahoo's Mayer eyes video programming to boost growth

As Marissa Mayer approaches her one-year anniversary as chief executive of Yahoo, she's hewing closely to the struggling Web portal's traditional advertising model - and eyeing more video programming of every stripe as central to the strategy.

"We're working on various methods in terms of how we can increase our video views, and watching," Mayer said at the Reuters Global Technology Summit. "It's clear to me that our video business is something that's growing a lot. It's something that we'd like to accelerate."

Yahoo is currently bidding to acquire Hulu, the online hub for TV programming owned by Walt Disney Co and News Corp, sources with knowledge of the situation have said. Mayer would not comment on the bid for Hulu.

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The web pioneer was looking at buying French video site DailyMotion but had to abandon the effort after objections from the French government. Yahoo also has a growing menu of original video programming, such as the critically-acclaimed Burning Love TV reality show spoof, and it recently acquired the rights to the archive of Saturday Night Live television programs.

Online video commands higher ad rates than other types of web content and has become a fiercely competitive arena as it is increasingly viewed as a bulwark against the steady decline in prices for online display ads.

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On Thursday, Instagram, the mobile photo-sharing app owned by Facebook Inc, introduced a new feature that allows users to create 15-second videos. Facebook itself is reported to be readying an online video ad format. Google's YouTube, the world's No.1 online video destination, is expected to generate $5 billion in revenue this year, according to RBC Capital Markets.

Mayer took the top job at Yahoo after a tumultuous period in which the company had churned through several CEOs and many of its top executives and engineers jumped ship. She has revamped key products such as mail and the Yahoo home page, implemented morale-boosting measures like free food, and jumpstarted acquisitions.

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On Thursday, Yahoo closed its $1.1 billion acquisition of Tumblr, a blogging service that is one of the web's most popular hubs of user-generated content. Yahoo's stock has surged roughly 70 per cent since Mayer became CEO. But Wall Street analysts say much of the gain has come from stock buybacks and from Yahoo's Asian assets, including a 24 per cent stake in Chinese e-commerce giant and potential IPO debutante Alibaba Group.

Yahoo's biggest near-term goal and most important yardstick by which to measure its progress will be the rate of increase in the amount of time users spend on its websites, Mayer said.

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"Yahoo's ability to generate revenue for a thousand pages is reasonably good," Mayer said. "The challenge for Yahoo at the moment is traffic. How do we grow traffic? How do we gain usage? Because that ultimately will drive up revenue."

While rivals such as Google have experimented with new revenue streams, including subscription music services and online retailing, Mayer said Yahoo remains squarely focused on advertising.

"I believe in ads, I like ads. We may try some other things but Yahoo is an ad company," Mayer said, but added that it does not mean Yahoo will cut on its own original programming.

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The company's headcount has decreased by about 1,000 employees during her first year, through a combination of attrition and ramped-up performance management, with staffers now getting reviewed on a quarterly basis instead of every year, she said.

But Mayer said the company was aggressively pursuing new talent: job applications recently peaked at 10,000 a week, more than twice the level of a year ago. At the same time, Mayer has moved to cut back the thickets of bureaucracy that she said had sprouted across the company over its 18-year history.

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Mayer installed a system called PB&J, short for Process, Bureaucracy and Jams. That has eliminated roughly 700 irksome or unnecessary procedures within the company, such as forcing employees to undergo a special orientation for the company gym.

"I understand that we are geeks and we may not be that coordinated but I think we can all figure out how to use a treadmill without an orientation," Mayer said. Some industry-watchers assumed the PB&J moniker was an homage to the so-called "peanut butter manifesto," in which former Yahoo executives warned of problems plaguing the company.

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Mayer said the real story was much simpler. "Most days for lunch I have a peanut butter and jelly sandwich," she explained. "So sitting there I was like 'Can we call it something simple and fun like PB&J?' And we kind of backed into process, bureaucracy and jams. But it works."