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Yahoo hired Katie Couric because you actually watch video ads
Still, lots of people are perplexed at the splashy hire
 
Yahoo is betting you won't be able to look away. 
Yahoo is betting you won't be able to look away.  (Larry Busacca/Getty Images)

Katie Couric is the biggest of Yahoo CEO Marissa Mayer's big recent hires in her drive to increase the quantity and quality of Yahoo's original content. Poaching Couric from ABC News is a much splashier, more expensive proposition than, say, hiring tech columnist David Pogue from The New York Times. Sam Biddle at Gawker's Valleywag sums of a lot of people's reactions to the news:

On Monday, Mayer officially announced — via Yahoo's recent acquisition, Tumblr — that Couric is "joining Yahoo as our Global Anchor," starting in early 2014. Couric will be "the face of Yahoo News," joining Pogue and other new New York Times hires, political reporter Matt Bai and new Yahoo News editor in chief Megan Liberman, in "pioneering a new chapter of digital journalism."

In a press release, Yahoo elaborated that "Katie will help develop Yahoo News' coverage with a growing team of global correspondents who will report on live world events, anchor groundbreaking interviews with major newsmakers and thought leaders, and much more." Couric will reportedly draw a salary in the millions, and as any news organization could tell you, having a "team of global correspondents" doesn't come cheap, either.

Valleywag's Biddle isn't the only one flummoxed. But he asks some good questions. Mayer says that hiring Couric is "just the beginning," he says, but "the beginning of what, exactly?"

I doubt Mayer knows. Part of Mayer's strategy at the helm seems to be making so such a grand panoply of incoherent decisions, that at the very least, we stop reflexively questioning any of them. Tumblr, wow! Summly, sure. Rockmelt, hoo-boy, alright. Katie Couric, OK, why not — she's talented, charming, famous, and many other nice things. But... why Yahoo?...

Couric is surely commanding a serious salary from Yahoo! (she used to bring it $15 million a year at CBS) while the company doesn't have any confident revenue streams from a thing that isn't Alibaba. It's hard to imagine Yahoo's reinvention hinging on the magnetic presence of Couric, whose existence is a great fit for television, but less for, what — short internet videos? [Valleywag]

Mayer's acquisitions suggest she wants Yahoo to be both a tech company and a media company, and she's willing to pay handsomely for top talent on both sides. But she has to pay for that somehow, and Yahoo's largest source of revenue is display advertising, followed by search. Here's Yahoo's problem, in a chart it released with its latest quarterly earnings report:

Yahoo is selling more ads, but earning less from advertising, because display ads are paying less than before. "It's hard to see the economics of building a high-quality news operation on a diet of internet advertising alone," Gartner analyst Andrew Frank tells Entrepreneur. "It's going to be very, very difficult to compete with the CNNs and Bloombergs of the world."

Yahoo probably won't be the next CNN, but it doesn't have to be to get in on some of that TV advertising revenue. Couric is "a very brand-friendly personality, especially for a female audience," Opus Research analyst Greg Sterling tells Bloomberg News. "They're looking to get TV-style brand advertisers to spend with them."

And that's Couric's real value to Yahoo.

Mayer is trying to turn Yahoo back into an essential web portal, and her high-profile news coups are, among other things, her marker that she's serious. Unlike Bai or Pogue, Couric brings a very well-established TV brand to Yahoo's turnaround efforts, and strengthening Yahoo's "online video efforts has been a recent key focus for Mayer," says Kara Swisher at All Things D. Here's why: "Video ads are a big area of revenue growth online, as traditional graphical ads fade."

Readers can ignore display ads or block them with readily available software filters. But if you want to watch a video, you have to sit through that 30 second (or longer) ad beforehand. TV advertising is more lucrative than print ads, and the same is true online. To get people to watch TV on Yahoo, Mayer has made deals with other content producers — like the right to stream Saturday Night Live's archives — but as Netflix, Hulu, and Amazon are proving, nothing draws viewers like original content.

That's the idea, anyway. Alyssa Rosenberg at ThinkProgress is skeptical it will work, noting that Couric isn't exactly in the prime of her career. While we know the general sense of what Couric will be bringing to Yahoo, program-wise, she says, "what we don't know yet is what Yahoo thinks that Couric can bring to its efforts to build web-native programming that will bring in significant advertising dollars, a feat companies like Netflix and Amazon have yet to pull off."

Maybe Mayer can pull it off, Rosenberg adds. Lots of people use Yahoo as their entry point onto the internet, after all — something not true of Netflix or Amazon. But "showing that you'll cut a check isn't the same thing as proving you have a visionary plan for the future of content."

 
Peter Weber is a senior editor at TheWeek.com, and has handled the editorial night shift since 2008. A graduate of Northwestern University, Peter has worked at Facts on File and The New York Times Magazine. He speaks Spanish and Italian, and plays in an Austin rock band.

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