It endured a torrid few months and the installation of a whole new ad platform, capped by the replacement of its CEO and president. Lately, it acquired a handful of advertising services outfits, launched a big European sports site and struck a deal with hot social network Bebo. So in what kind of shape is Yahoo on this side of the Atlantic? paidContent:UK editor Robert Andrews spoke with Yahoo UK managing director Glen Drury to find out. The full audio is for download here.

Hi Glen, how’s it going?

It’s quite a fun time to be in the internet. I’ve been doing it now for almost eight years, I suppose, and it’s never been as busy or as changeable as it is today, which is quite exciting. I thought that it would slow down and was turning in to a normal industry but it still seems to be motoring on to new heights all the time so that’s great.

You arrived at Yahoo in the Kelkoo buyout in 2004, so I was wondering how the move across to Yahoo has gone for you personally and how Kelkoo’s integrated in with the Yahoo portfolio.

I started with Kelkoo in 2001 and I became the managing director of Kelkoo in the UK in 2003, that may be where the mistake was. I did come as part of the acquisition of Kelkoo in to Yahoo. It’s had its good and its bad points, to be quite frank. I think Kelkoo is a fantastic company and many things have changed in that part of the industry. It’s not just Kelkoo that’s been affected. You probably noticed that Scripps, as an example, was announcing that the profitability of their company that they own, which is BizRate and Shopzilla, has been affected. An industry-wide perspective and just to give you the two-second take - I think that Kelkoo and all its competitors need to really re-think the way that they’re going to run their businesses in the future.

One of the questions that comes up when people think about Yahoo, it’s so diverse, is “What is Yahoo?” So, in the local context, could you tell me “What is Yahoo UK?”

Yahoo UK is a portal in the true sense of the word. We offer a very large variety of services to a very large audience that we have. In the main, what we try to do is, we try to produce prospects that really meet our users’ needs in a whole range of categories. Our biggest ones would be our news and sport sections, our communication sections, obviously our front page gets loads and loads of people coming there, Kelkoo is a big product for us, and some of the finance and entertainment channels, and then, of course, music. That’s probably the full range of most of the biggest things that we do. Then there’s a whole sub-range of smaller things that are quite effective that people use on a regular basis as well.

What differentiates Yahoo’s operation in the UK, or Europe, from mothership back in the US? For example, what do you find works in the UK that doesn’t work in the US, or vice versa?

Because we’re a smaller operation, I think it’s a lot easier for us to get things done and to have the kind of conversations that maybe someone would have to fly from southern California to northern California to have. That gives us an amount of independence. I think we’re particularly good on understanding the users’ need on user-generated content. As an example, our Answers product, which was originally out of Korea, and then taken over by the US - all of the user-generated content elements are now actually run from Europe because we had bigger needs and our users were generating more feedback to us about the best way to run it. The US runs the mainstay of the product and we run the user-generated content part of the product.

So you don’t ever feel like you’re at the end of the chain here in Europe, that all the innovation goes on on the other side of the pond?

No, I think we’ve got the ability to do innovation. As I said, with Answers we’re certainly doing innovation there. With Kelkoo, we’re doing our own innovation, we’re not tied to what the US is doing around that, and we have to localise everything anyway, so even if you generate something on a main platform it still has to be localised in to language and what’s important to the local community that uses Yahoo.

This month you announced a deal with Bebo to power their display advertising. The company called it a “groundbreaking” deal and, of course, it is a significant addition in competing with Google and Microsoft to power social network advertising. But what will Yahoo get out of it, why is it so groundbreaking and what difference will it make to your company?

Jerry (Yang) and Sue (Decker) made some announcements a while back about our drive to become the biggest ad network for the media side of the business. The reason it’s groundbreaking is, in the UK, Bebo is the biggest site, in terms of time spent and page views, by an absolute mile over anyone. The reason it’s groundbreaking is, we’re going to be able to apply many of our very good advertising tools to that huge community of users on Bebo and be able to do two things - one is offer the user a better service because they will be getting a higher-quality ad and a higher standard that is more targeted to their needs. Two is that we’ll be able to offer Bebo and Yahoo an opportunity to monetise all that inventory in a much better way than they could’ve before.

Could you tell me a bit more about how you will target those ads? Will it use the same ad targeting technology that Yahoo already has or will you be taking information from Bebo social network profiles to enhance the targeting?

No, all of our targeting is anonymised and it’s around a whole range of different things - of course, you get demographic targeting, you get geo-targeting, you get some behavioural targeting around the way that people act - but not from an individual basis, more around the cookies that people have. So we won’t be taking anything out of Bebo’s own information that they gather from people unless, at some point in the future, the people wanted to share that information with Yahoo. It’s more about ensuring that, as you move around the network… When you add Bebo and Yahoo together, we get about 90 percent of all internet users on our servers in any given month - so the great thing about what that means is that, using our cookie and tagging systems, we can ensure that people don’t get bombarded with one ad when they move around the internet. We can give them ads that follow the kinds of things they do and the kind of searches they do on Yahoo and carry that over in to when they’re operating on Bebo.

And how long is this relationship scheduled to last?

I think it’s three years.

It’s quite deep integration; you talk about integrating Yahoo Answers with Bebo as well. How will that work?

Answers is a product that we’re already doing things with - as an example, when Crufts, the dog show, was on, we integrated Answers in to Crufts, which got real experts about dogs talking to people who had real questions about dogs. In the Bebo, scenario, it’s going to enable people, in their profile, to ask and answer questions and to become experts in any given area that they might hold some expert opinions in.

How’s the ad deal work out financially in terms of what cut each party gets?

That’s something we can’t disclose.

The deal by which Google powers MySpace’s ads was reported to have been $1 billion - I guess it’s fair to say that this is less than that?

I don’t know what the total numbers are but, unfortunately, I just couldn’t share those with you because all financial announcements have to come out of the US.

Do you foresee any other similar deals to power ads on social networks?

I don’t know about (just) social networks, but certainly our stated plan at the outset of what we’re doing was to try to create an ever-larger group of sites that enable us to help the advertiser and help the user get the ads that best suit them. Whether it will be another social networking site - I’m sure that, when the deals with MySpace and some of the others come up for availability, they will speak to us, but, at this point, I don’t think we have anything to announce.

What I would say is that - using things like RightMedia as an example - we already power a significant proportion of the media ads on MySpace in the US through RightMedia. We’ve got three different ways that we can handle affiliation - one is on the major deals like eBay or the newspaper consortium in the US, Bebo here in the UK and Vodafone, those deals, we kind of do a direct deal with Yahoo; but we also have RightMedia Exchange, which allows any publisher and any advertiser to go in and create a discussion around what the true value of that placement is. Now, with BlueLithium, we have a network that’s outside of the high-end with Yahoo and more mid-range, mid-tier partnership that we will continue to expand and grow over time.

I mentioned that the Bebo deal is an impressive degree of integration, shows the two sites getting closer together. Back in May, there was a speculative newspaper rumour that Yahoo was talking to Bebo about a $1 billion acquisition - was there any truth in that?

I have no idea, but I can tell you that we’ve probably been talking to Bebo since May about doing their ads and you know how things can get distorted so I wouldn’t be surprised if it was somebody saw Yahoo people coming in to Bebo and assumed that we were going to buy Bebo when, in fact, we were talking about running their ads for them.

So, equally, it wouldn’t be true to suggest that the deal you recently struck is a prelude to a takeover that could still happen?

Again, another one that wouldn’t be discussed at my level really.

What is the merger-and-acquisition strategy in the UK, or is it controlled from the other side of the pond?

The acquisition strategy across the world is the same - we are looking to either build or partner or buy technologies and companies that make a lot of sense for us. As we did with Answers, we built it ourselves and, as we’ve done with BlueLithium, we bought a technology. If you look at most of the acquisitions we make, they mostly lay around technology rather than audience buys and most of the partnerships lay around audience. That may give you a steer for how we’re going to go in the future.

In terms of the UK, basically any business in the UK that I see that I think is really integral to running our business in the UK, I can take that up to the committee and support it as an exec and say “I’ll be the senior exec that supports the purchase of this company or the partnership with this company” and then kind of ride with that process. But, certainly, ultimate decisions on those sorts of things would get taken in the US.

And when you look at the UK scene do you see much fertility - are there many interesting prospects to buy up?

You know, I think, sadly - and I wish it weren’t true because I’ve lived here now for nearly 12 years and I have a British passport and so I feel myself British even though my accent doesn’t say it… Sadly, I don’t see much innovation coming out of the UK; there’s much more innovation that comes out of California, significantly more innovation. I think there’s some pockets of innovation around the Scandinavian countries and Israel but… Everyone’s constantly pitching their ideas to us and, to date, I don’t see anything that would make my UK business significantly better by doing something for the UK only that wouldn’t pan out for all of Yahoo across the world.

That’s a shame. You mentioned that the acquisition strategy is centred on buying technology...

... What I’m saying is, that’s how it’s happened so far. We haven’t bought audience because, according to which numbers you believe, we still arguably have the largest audience in the world so we’re not necessarily looking to buy audience in that way. We’re really focusing on trying to understand our users better, understand what their needs are and providing them with tools and products that make their lives easier in doing the things that they want to do.

You mentioned that you bought RightMedia and BlueLithium, which is the UK’s second biggest ad network, and also Actionality of Munich. So I guess you’ll be integrating technologies from those companies in to your existing technology, is that how it will work?

The technology side of things, we will certainly do that. On RightMedia, we are very nearly completely integrated now; we were able to get some really good tools and some really good things from them that made our ad systems more robust. And I think that’s probably exactly true of BlueLithium as well, that we’ll be able to get some really great tools that will help us do some good things.

When you look at the online ad space at the moment, you see a lot of activity with Google buying DoubleClick, AOL buying Tacoda, Microsoft buying aQuantive - but also the ad agencies themselves getting in on the act, WPP buying 24/7 RealMedia, Publicis buying Digitas; each competing for the same ad clients. Do you see the agencies themselves now increasingly as competition rather than people to have relationships with?

No, I don’t think so. I think if you asked that question to Google, I think they would tell you, based on some announcements they’ve recently made that they certainly see agencies as competition. But Yahoo has always had a very very good relationship with the client and with the agencies. For us, it’s very important that we keep both of those groups as working partners, is the best way to go, rather than trying to cut one out or other other. For us, that’s a really, really important issue - that we are really together with helping the agencies understand the world of media better and the agencies are with us helping their clients understand how to effectively buy on Yahoo and how to get the most bang for their buck as it were. There’s definitely no desire on our part or interest on our part of seeing the agencies as being direct competitors. And I think, truthfully, probably on the MSN side with aQuantive, I wouldn’t be surprised to see MSN getting rid of the aQuantive businesses which are truly the agencies. It would surprise me if, over the long term, they kept those in the portfolio with aQuantive and ran an agency as there’s kind of a conflict of interest between being an agency and a media owner.

Yahoo’s new advertising platform, Panama, launched in the US later 2006 and in the UK this July. How’s that bedding down now, given there was a little bit of a gap between roll-out in the US and UK?

As you can imagine, you can’t roll this out worldwide because we’re the only company that’s ever migrated as many millions of advertisers as we have all at one time. We’ve been really in the UK, since February, starting this launch and we completed in the summer so we weren’t that far behind the US either. We’ve now migrated all of our clients over to the new platform, it’s doing just as well for us as it’s done in the US for the business there. The feedback from clients is that it’s an exceptionally good product and it’s definitely the best in the marketplace.

Content partners - I guess Yahoo is the original portal to do relationships and get third-party content providers on your site. How do you see that playing out? Do you think, for example, having exclusivity on content partners on your site is an important thing?

Content is one of those things… everybody has ever-changing ideas about what content is and where it’s going. There’s probably three groups of content that you need to think about. One is professional content that you might call the head content, then there’s the amateurish professional content that’s the middle and then there’s all the user-generated content that comes out down on the tail.

Yahoo has always been about enabling and thinking about our users. It’s one of the driving forces that started the company, being a listing of Jerry and David’s favourite websites, and really having that human element. We’ll continue to do that going forward. There will be opportunities for us to do very unique content, as we do with The Nine in the US where we license a specific bit of content that is web-based only and really goes forward. Those things will continue to come up and we will evaluate each one as they come.

Most of our drive is about enabling our users in particular to interact with every single one of our products as well as possible. Not only are we integrating Yahoo Answers out in to places like Bebo, we’re also integrating Answers in to our own sites like our Travel site or our Cars site as two examples. So we’ll continue to build on that kind of community element that is around user-generated content and, at the same time, have great partnerships with people like Universal Music and those sorts of people in our music division so that we have both. A great example of rolling both of those two together is Get Your Freak On in the US - basically, you video yourself singing to someone else or you’re dancing to it or whatever; you send that video in to Yahoo, we clip it and put it back to the real music with the artist’s recommendation and then we release it on Yahoo Video. Interestingly, one recently was Shakira and one was Weird Al Yankovic and the fan videos went higher in the Yahoo charts than the actual original videos, which is quite fun. The artists are really having fun seeing how tied-in their fan base is with being excited about the music that they’re generating.

Google’s YouTube is adding a lot of brand relationships with homegrowns like the BBC quite quickly. Are you missing out or do you have your own portfolio of video partners that you’re proud of?

I wouldn’t say that we’re missing out. YouTube and BBC are still in early stages, as we are with the BBC in discussions about how to take their content. And not just the BBC - of course, all the major television channels are speaking to us as they are to YouTube, so you wouldn’t necessarily say that you’re missing out. But one of the things that’s true is that YouTube will have significantly higher volumes of non-approved content - let’s put it that way - than we will. We will tend to take a more cautious approach to ensuring that we have the right rights and the right organisation in place with all these types of partners.

A couple of months ago, you struck quite a big relationship with Eurosport, who have affectively outsourced their online news sites to Yahoo and you took over production of Eurosport websites on a pan-European basis. How’s that going?

It’s going very well actually. We, according to comScore, now have the largest sports site across Europe, which is very exciting. There’s feedback and there’s actual behaviour that you can watch - typically, when you change up the way a website looks, you see a dip in user behaviour that takes a while to generate back to the level it was. In fact, actually, what we’ve seen is almost no dip at all, and in some places like Germany we’ve seen a significant increase in the user behaviour, the amount of time they spend with the site and the number of articles and pages that they consume. That’s very, very exciting for us and we’re only in the very early stages of what we can do with Eurosport and we’ll have some very exciting announcements to make over the next few quarters about some of the stuff that we’re going to do with them to really enable it to be the best sports site out there bar none.

I did see at the time that some of the die-hard users of the original Eurosport site that was operated by Eurosport itself complained a little bit that they’d lost coverage that they had before. Have you now accommodated them, or is it just one of those things?

To be honest with you, if they’re complaining, they’re not complaining very loudly. Everybody has a little bit of trepidation when you make any change. It’s part and parcel of making any big change, and we made some very significant ones. The vast majority of the feedback we get are people who are very happy and very excited. And more important than feedback is actually watching the user behaviour - and watching the behaviour is showing us that not only did we not see a dip in activity, we’ve seen an increase across all the sites.

One of Yahoo’s big strategies globally is social search - something that’s been coming for a while now and I know you’ve spoken in public about the migration from organic search to socially-powered search. But where is this in Yahoo’s portfolio?

When certainly Answers is socially-powered search. And del.icio.us is is socially-powered search. Upcoming is is socially-powered search. Two of which we purchased, one we built in-house. Those are the initial steps and the point now is to integrate those in to really seamless use so that users can get the best out of all of it.

I haven’t really ever talked about doing away with algorithmic search because I believe there’s absolutely a place for that. But the difficulty with algorithmic search is that many, many, many website owners are unable to create a website that is easily crawlable, easily discoverable by robots - whereas, by people, it’s much more discoverable. Enabling people to do things especially through things like del.icio.us gives people the ability to find something that they wouldn’t otherwise have found.

del.icio.us has been kind of slow in development - although a new version is around the corner? Do you think del.icio.us can power that social search for a mainstream audience, because it’s quite techy?

Over time, as we begin to integrate it into search, I think it absolutely will begin to enable that. If I look at MyWeb, which was Yahoo’s own version of what del.icio.us does, and the implementation that we had with it before we bought del.icio.us, it was quite a good service so that anybody who was linked to me via MyWeb, I would see their results at the top of an algorithmic results page. Although that sounds very simple, it was always very effective because my circle of friends is also a group of people who are searching for things that are very similar to me. I feel confident that, as we are able to roll out a new version of del.icio.us and as we are able to integrate that well in to our algorithmic search, then it will significantly benefit users.

Yahoo has a very popular news site. Recently, Google News announced it was going to start publishing wire content from the Associated Press and, in the UK, the Press Association. This (was seen as) quite a big deal, but is it a big deal? This is exactly how Yahoo has operated for many years, by taking syndicated content, isn’t it?

Yes. They’re a search engine who is trying to help you find pages on the internet, and that’s one of the things that we do but we also have partnerships with many of these people because we also provide a proper news service rather than a search for news articles. We have feeds for AP and we also have Reuters that we use… We have over 450 content partners that provide data in to us that we then put in a more usable format for our users.

Presumably, Google is not going to step at the AP and AFP and PA. Do you see looming competition from them on the news publication front, on-site?

I don’t think that Google has yet proven that they have another way to gather news other than doing that. And I would question whether or not Google can truly scrape the sites that use AP feeds without AP putting a lot of pressure on those sites to stop Google doing it. I don’t know where that will pan out to end up and I’m not sure I understand the strategy of Google’s there to do that.

To go the other way, we started YouWitness news in the States with Reuters, in which we’re enabling people through their mobile phones to use Flickr to upload photos and to post articles on an on-the-fly basis and the editors of Reuters will pick the best news stories from users and will publish those stories on our site and through Reuters. So, instead of getting rid of partnerships, we’re enhancing them and making them better for our users.

Seems that newspapers are afraid on two fronts here - some speculate that newspapers, as a result of the Google News deal, will see reduced traffic, but some papers like The Telegraph here in the UK are already getting itchy about the way Google News crawls their stories. What are newspapers to do? Do you think the best thing they can do is to come on board to you guys as a syndication partner and publish their content on your site?

Certainly we absolutely take syndicated content from a whole range of people and we wouldn’t stop discussing that with anyone. In the US, of course, we’re selling the ads for about 400 newspapers now on their own websites. For me, there’s a big difference between newspapers in the UK and US and that is the commute, especially around the southeast - it is not a ubiquitous thing today to see people having their laptops open reading web pages while they’re commuting. Whereas it’s hard for a newspaper to go down. I suppose, if you get it wet, you’re not going to be able to use it. But going through tunnels and going on the underground means that the internet will continue to be a difficult thing to run on transportation. I truly believe that newspapers, in that instance, at least with commuters, will continue to have a nice relevance. There will continue to be a battle there and Yahoo is certainly not going to enter the Google side of that battle as far as I can see.

How’s Yahoo’s mobile efforts panning out in the UK and, from your observations, what aspect of your mobile services do you see people using most?

Yahoo’s mobile plans are going very, very well, it’s quite exciting. As you’ll probably know, we now sell the ads on Orange for search and we sell ads for media on Vodafone. Those two deals are quite exciting and we’re very happy with the level that we’re achieving right now. We’re also in negotiation with many other carriers and handset manufacturers to ensure that Yahoo’s Go product is not only included in the handsets that people get, but prominently included. Some of these people are potential deciding that it’s a nicer thing to have Yahoo run their portal on a mobile phone than it is to run it themselves. Those partnerships will absolutely continue. There’s a whole range of partnerships that we signed around the world, both in the US, in Asia and in Europe, and you’re going to continue to see really positive announcements coming out about how many sites are looking to Yahoo for our new oneSearch product, which is search specialised for the mobile phone rather than web search crammed in to a mobile phone, and for many of other other products like Mail or Messenger that are quite effective tools on your mobile phone.

One handset maker, Sony Ericsson, signed a deal with Google to place its search behind its search button. Was that a blow to you - were you gutted about that?

It’s a competitive market. Are we gutted about it? Well, we’d like to win everything. I’m sure Google would like to win everything. It’s a matter of understanding where they are. One of the things that we’re seeing from talking to less the handset manufacturers and more the operators because, in Europe, most handsets are not sold contract-free, they’re sold as part of a contract and the manufacturers, whatever they put on the phone tends to get wiped and put back in with the carriers… We also are talking to Sony about a range of things that we could do with them and it’s sad if they sign a contract with someone that has a competitive service, but my guess, and the feedback we’re getting particularly from handset manufacturers, is that our search is clearly the number one search in mobile by an absolute country mile. The reason for that is we designed that to be specific to a mobile user’s needs, rather than taking web search and cramming it in to the mobile - many of the deals that Google signs today are because people assume that Google has a dominant position in web search that they should also have a dominant position in mobile search, and I think what we’re finding is that, as we compare the products with our clients, there is a great expression of shock when they see the two products compared side-by-side.

Mobile advertising - this was due to be the year that it takes off.

We’ve certainly seen some really great benefits around the media side of mobile advertising with our Vodafone product and, although I can’t tell you numbers because we don’t announce those in Europe separately, you may look to Vodafone to answer some questions there for you. We’ve been doing mobile search for a long, long time and the Orange paid search results for a long time.