Quite a bit of noteworthy news this week:

Monday:

Yahoo! has acquired many Web 2.0 / social networking properties in the past year, including del.icio.us, Flickr, Upcoming.org,  and WebJay (plus they are rumored to be shopping for digg).  Yahoo! also launched 360 last March, Shoposphere in November, and Yahoo! Answers in December.  From my perspective, they are turning to social networking as the answer to competition from Google.  At Bazaarvoice, we know that people who write reviews on a retail site return an average of four times just to see if their review posted yet.  This shouldn't be that surprising as the social call-to-action to write a review in the first place would lead one to want to see that their own word-of-mouth actually "went public".  Yahoo!'s strategy seems sound to me as they have a diversified portfolio of services to get users addicted to, and therefore monetize more advertising.  Therefore, the more repeat visits, the better.

So, it makes sense to me that last week Yahoo! announced a contest for users to create their own Yahoo! advertisements.  This is a smart way to generate word-of-mouth for the new Yahoo!  It reminds me of what General Motors did recently for The Apprentice.  Here is my blog entry on that topic.  You may want to check out some of the new Yahoo! user-generated ads – some of them are quite clever and entertaining.  There is a lot of talent out there waiting to be tapped (remember crowdsourcing?).

Update on 8/15: Data released by Neilsen/NetRatings shows visitors to Google-branded sites in July spent less than an hour a month while AOL visitors logged 5 hours 35 minutes and Yahoo! visitors logged 3 hours and 10 minutes.  This made Terry Semel proud, as clearly his diversified media strategy is his core competitive differentiator.  Google visitors are reported to be more like "hunters" while Yahoo!'s are "gatherers".  No doubt this is encouraging for Yahoo!, but what really matters for both Google and Yahoo! is how well they drive customer acquisition for their clients.  Google's entire business model is based on that goal while the majority of Yahoo!'s is (they are more revenue diversified for obvious reasons).  I believe that Yahoo!'s user-generated ads strategy will only drive more awareness of why people need to spend more time on Yahoo!.  Are companies looking for hunters or gatherers?  Obviously the answer is a mixture of both.

Thursday:

Wayne Stribling, our VP of Client Services, sends me this article.  I am struck by two things.  First, this quote:

• "The voice of the customer is actually getting heard by the manufacturers," said Neal Oddes, director of product research and analysis for J.D. Power. "They are understanding what's getting replaced, what's going wrong, and then they're taking that information and designing better products."

Second, the fact that General Motors has two of the brands in J.D. Power's top five most reliable.  This reminds me of my blog entry about the change in General Motors culture brought on by word-of-mouth techniques (such as their blog).  I like the fact that J.D. Power's is now showing quantitative evidence of this change.

I have long believed that the Internet and the power of word-of-mouth will make companies more customer-centric and, therefore, products and services far better than in the past.  An educated consumer serves as a wake-up call – no more being lazy.  Co-creation will generate more sales and customer satisfaction.

Friday:

Google, not to be outdone by Yahoo!, invests $900 million in Rupert Murdoch's MySpace to become their exclusive search engine provider.  Instead of Google creating the social networking properties, like Yahoo! is doing, they decide to partner with the best of them (the traffic growth for MySpace is off the charts).  Here are the words from Eric Schmidt, CEO of Google, from his speech at the Search Engine Strategies conference this week:

• But the "development to me that's most interesting is the social networks as online lifestyles. That's a really new phenomenon," [Schmidt] said. It's a phenomenon on scale with the rapid-fire adoption of instant messaging, he added. "It's [social networks] a big deal."

$900 million is a lot of money, no doubt.  But there are two reasons why this makes a lot of sense for Google.  First, eMarketer announced that ad growth on social networking sites will grow astronomically ($280 million in 2006 to $1.9 billion in 2010).  Second, MySpace is the favorite destination for the IM Generation, which all marketers will need to learn how to advertise to.  They distrust traditional advertising (and companies) more than any other generation (because they are the most educated, due to the Internet), and they turn to their friends for recommendations (i.e. word-of-mouth) more than any other generation.  For more research, see my blog entry on the IM Generation.

Pivotal changes are underway… and that creates a tremendous amount of opportunity for marketers if they navigate these new waters correctly.