Marketing evolution’s next step will start with the internet giants

The potential Microsoft/Yahoo! merger and Google’s ad serving business may not alter just online advertising, but the whole of the marketing industry

The Microsoft bid for Yahoo! is (symbolically at least) a defining moment for the evolution of marketing – not only online, but across the board, including the smokiest of smokestack industries.

Working together Microsoft and Yahoo! have the potential to address a breathtakingly huge business opportunity: serving up ads in what’s certain to be the biggest media sector. But it just so happens that Google has opened the door to an even bigger opportunity – so vast that it puts this media ad-serving business in the shade.

It is, however, impossible to see this opportunity from within today’s media/marketing model. To glimpse it, ask yourself this simple question. “What is the one thing every consumer wants when going to market, no matter what he or she happens to be buying?”

The answer is simple. What every consumer wants is to make the right decision. The right decision trumps all other needs as a form of consumer value because it comes prior to, includes and embraces them. If I can make the right decision, the right goods and services follow as a matter of course. Yet, “making the right decision” is the one need that industrial age marketing does not address – because, of course, it is focused exclusively on influencing decisions in favour of particular brands or products.

Pick up any marketing textbook and it will wax lyrical about how you have to understand consumer needs and motivations, focus hard on their needs and wants, and gain insight into their behaviours. Philip Kotler’s Principles of Marketing has reared generation after generation of marketers, for example. You must, it tells you, understand each of the five stages of a consumer buying decision: needs recognition, information search, evaluation of alternatives, purchase decision and post-purchase behaviour. Yet nowhere in its 712 pages does it suggest that marketers should understand these five stages in order to help consumers make the best possible decision from their point of view – i.e. address their decision-making needs.

Instead, Kotler leads us right to the edge of this lodestone of consumer value, only to charge away from it as fast as he can. “Marketers should study buyers to find out how they actually evaluate brand alternatives. If they know what evaluative processes go on, marketers can take steps to influence the buyer’s decision,” he writes.

Today’s media is built around Kotler’s charge. Publishers produce editorial in the form of news and entertainment that acts as a hook for eyeballs, to be exposed to advertising which is designed to influence the consumer’s decision in the advertiser’s favour. If the advertising addresses the consumer’s information needs it is only by accident. Its content is designed to address the information needs of the advertiser – the need to influence buyer decisions.

The Yahoo! success

Yahoo! embraced this media model with unrestrained enthusiasm. At every turn, its leaders reaffirmed their quest to make Yahoo! the market leading online media company. As a result, two things happened. First, because it saw its job as delivering eyeballs to advertisers, it was overwhelmed with opportunities. There are a million and one cool, new things you can do to attract eyeballs online, and for a time Yahoo!’s share price reflected this sense of infinite opportunity. (Back in 2000, its share price was nearly seven times higher than it is now, even after Microsoft’s bid). However, because its criteria of success was eyeball delivery rather than consumer decision-making value, it had no yardstick by which to distinguish the very important from the less important and ended up dissipating its energies trying to do anything and everything. At the same time (and this is the second key effect) because Yahoo! saw search as “just another eyeball delivery mechanism”, it never grasped search’s true significance.

Google had opened the door to something different: a service that delivers value by addressing the needs of the information consumer; one that helps the consumer make a better decision. The difference between the two models was illustrated perfectly by Google’s focus on “natural” search results (with the most relevant result ranked highest) and those generated by Overture, which was acquired by Yahoo!. Overture’s model expressed casual contempt for the needs of the information user by ranking search results not by the relevance of the search term but according to which advertiser happened to have paid the most to be highest up the list. Influence versus better decision-making; low consumer value versus high consumer value.

This was important not because of its ethical tinge (though that probably helped) but because of cold hard cash. In the competition for consumer attention, it was the service that best addressed the consumer’s decision-making needs that attracted the most traffic.

Unlike Yahoo!, Google never saw itself as a media company. Instead, it opened the door to a vast new consumer information services industry: an industry that earns its keep by helping individuals make and implement decisions better (where “better” includes both the quality of the decision and how quick and easy it is to make). In time, this new industry will dwarf today’s media and advertising industry for some simple but compelling reasons.

First, it represents the consumer’s doorway to value. Second, it has the edge in the battle for purchase-related consumer attention because consumers are more inclined to pay attention to information that serves their decision-making needs compared to information that does not. Third, along the way it unleashes the new oil of the information age – the rich new information that consumers volunteer about their intentions, desires and preferences in the course of searching, evaluating and making decisions. Finally, as Google discovered, it’s also the natural home for most (though not all) advertising: advertising that’s “relevant” (which fits the consumer’s decision-making agenda rather than the advertiser’s messaging agenda).

Search is only the beginning of this new industry. It also includes comparison, peer and expert reviews, online decision trees, problem solving communities (see and a whole lot more. The exciting thing about it is that once marketers relax their obsession with traditional messaging and influencing, it actually opens the way for much richer and much more efficient exchanges of information between them and their customers.

Yahoo! was – and still is – an incredibly successful business. It just had the bad luck of competing with an even more successful one. The lessons – the different processes, mechanisms and forms of value generated by a messaging agenda versus a personal decision-making agenda – don’t only apply to the differing fortunes of online pioneers. They apply to the future of marketing itself.

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