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Aug. 14, 2007

Yahoo has now surpassed Google in overall customer satisfaction for the first time, according to the University of Michigan, which did some research on the major search engines in use today, as well as Internet news portals as part of its ACSI (American Customer Satisfaction Index).

On average, Google had topped the University of Michigan’s ranking since it was first included in the survey more than five years ago.

For most industry observers, Yahoo’s rise to the top spot was unexpected, since it comes at a time when many on Wall Street wonder what’s next for the company's future.

Yahoo's new CEO and original co-founder Jerry Yang has said he’s looking to unveil a new strategy for the company in the coming months, and investors have avoided the stock after Yahoo’s latest disappointing earnings results.

On average, Yahoo’s overall customer satisfaction score rose almost 4 percent from 2006, while Google’s rating fell close to 4 percent.

Looking at the other top search engines, Microsoft’s MSN got a slight increase in its user satisfaction score, while IAC-owned Ask.com saw its user satisfaction score increase by an unexpected 5.9 percent.

AOL, the search engine and portal owned by Time Warner, saw its user satisfaction drop over 9.44 percent from 2006.

The decline can be attributed to some marketplace confusion as AOL transforms from more of a subscriber-based ISP (Internet Service Provider) to a site where its content is free and supported by a lot of advertising.

The good news is the problems that AOL is having are less about the site’s capabilities and more about customer service during the site’s transformation. Some industry observers think that once that is behind them, AOL will be ready to compete more effectively.

One problem for the big media sites is that more readers appear happy to get their news from the likes of Yahoo and Google, which offer an aggregate of stories from multiple sources. It is worth noting that the “other” category for online news had a higher average satisfaction score than any of the major national sites.

Turning to news sites, the bad news for big media is that, for the most part, users are becoming increasingly dissatisfied with the large national media sites. For example, Disney-owned ABC News.com and the Microsoft/GE co-owned MSNBC.com portal both finished in a tie for first among the largest media sites.

Time Warner’s CNN.com and Gannett’s USA Today.com both saw their user satisfaction scores drop from 2006's levels for the same corresponding period.

This could be attributed to the fact that many sites of some regional newspapers are doing a fair job of bringing more local stories online.

Often, stories about a person’s favorite local sports team or happenings in their hometown are of more interest than what’s going on in say, the 2008 presidential race.

It will be interesting to see if more big media companies, as well as the search giants, seek to cash in on the hyper-local trend...

Increasingly, it seems that the battle for Internet readers and advertisers begins and ends with the companies that are able to provide the most comprehensive and relevant coverage of everyone’s individual needs.

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Source: Microsoft