Yahoo! (YHOO): No Profit In Customer Satisfaction

August 14, 2007 by Douglas A. McIntyre

The new University of Michigan American Consumer Satisfaction Index shows that people like using Yahoo! (YHOO) better than they do Google (GOOG), at least in the US. According to Reuters, satisfaction with Yahoo! rose 3.9% to 79 (out of 100) and Google fell 3.7% to 78.

People apparently like Yahoo! for its e-mail, social network (does it have one), and large number of websites devoted to individual topics.

Among other internet properties the Ask.com (IACI) search engine rose markedly in customer satisfaction ratings, up 5.6 percent to 75 points. And, Reuters writes Time Warner’s (TWX) "AOL, which has moved its focus from Internet access services to become an ad-supported source of e-mail and entertainment, slipped more than 9 percent to a score of 67 points." That rating is about the same as the one that the IRS got in the same survey.

The problem it these surveys is that they make good headlines, but appear to have nothing to do with whether any of these companies can make money. People, it would appear, go to Google for search. Search is inherently a more profitable business, at least in the way the internet works now.

Functions like message boards and e-mail are far less desirable to marketers. They are less targeted and do poorly in terms of getting online advertisers results.

Love Yahoo!, but don’t buy the stock.

Douglas A. McIntyre