By James Temple, San Francisco Chronicle Shortly after Carol Bartz took over as chief executive of Yahoo Inc. early last year, she met with Prabhakar Raghavan for an overview of the Sunnyvale Web giant's research division. As the head of Yahoo Labs ran through the catalog of computer scientists on staff, Bartz turned to him and asked: "Where are your psychologists?" Raghavan was stunned the newly installed CEO had so quickly gotten to a question he'd been asking for years. His answer was they didn't have enough. That's changing. In the last year, Yahoo Labs has bolstered its ranks of social scientists, adding highly credentialed cognitive psychologists, economists and ethnographers from top universities around the world. At approximately 25 people, it's still the smallest group within the research division, but one of the fastest growing. The recruitment effort reflects a growing realization at Yahoo, the second most popular U.S. online site and search engine, that computer science alone can't answer all the questions of the modern Web business. As the novelty of the Internet gives way, Yahoo and other 21st century media businesses are discovering they must understand what motivates humans to click and stick on certain features, ads and applications - and dismiss others out of hand. Yahoo Labs is taking a scientific approach to these questions, leveraging its massive window onto user behavior to set up a series of controlled experiments (identifying information is always masked) and employing classic ethnography techniques like participant observation and interviews. The insights have been published in academic journals and have already changed how the company organizes search results, sets reserve prices in ad auctions and leverages human politeness to keep people glued to Yahoo. "The challenge (is) to get people to think in terms of systematically dissecting what it is that makes users stick to the Web," Raghavan said. Recent hires within Yahoo's microeconomics and social systems division include Bob Moore, an ethnographer formerly with Xerox Palo Alto Research Center; Dan Goldstein, a psychologist and assistant marketing professor on leave from the London Business School; and David Reiley, previously Arizona public service professor of economics at the University of Arizona. It's encouraging that Yahoo Labs is "focused now on the benefit that computer technology provides to people, as opposed to focused on what technology can invent," said Len Shustek, an angel investor and chairman of the Computer History Museum in Mountain View. "It's difficult for computer engineers to design interfaces that the average person is comfortable with," he said. "It takes somebody who is in some sense ignorant of the technology to be a better proxy for the users." Others, however, see the efforts as symptomatic of a deepening identity crisis at Yahoo. "They're thrashing a bit trying to figure out what do people like," said Rob Enderle, principal analyst at the Enderle Group. "Are they a social networking site, are they a publication? They don't even know why people go to Yahoo." Broad new strategy Raghavan stresses that the company remains laser focused on computer science. But it's clear the technological priorities are shifting as Yahoo pursues a wide-ranging turnaround strategy aimed at making up ground against Google Inc. and putting itself back on solid financial footing. The most prominent example is the company's search engine. It was originally Yahoo's raison d'etre, but the company is now in the process of replacing its core search technology with Microsoft Corp.'s Bing tool. As part of the deal, it is moving about 400 search engineers over to the Redmond, Wash., software company. Yahoo has emphasized it is now competing in search through the front-end user experience, positioning results based on what people are most commonly seeking. In late August, the company unveiled a new search platform, featuring a left-side rail that refines results by criteria like brands, prices and information sources. This is a prime example of where social science builds upon computer engineering, Raghavan said. While a search algorithm figures out which online documents refer to Madonna the pop star and which refer to the Virgin Mary, it takes sociologists talking to real people to discover that when they enter the search term they almost always just want to listen to a song, watch a video or buy concert tickets. Another outgrowth of Yahoo Labs was a new feature in its chat application, Yahoo Messenger, added in April. The scientific literature and Yahoo's own studies have consistently shown people are more engaged with content, such as a television show, when they're sharing the experience with another person. There's a social obligation to keep watching that doesn't exist when someone is sitting home alone. Based on this insight, Yahoo created the Zync feature allowing two people chatting in Messenger to watch a video at the same time within the application. A follow-up study after the launch found people spent significantly more time chatting and trading links - a sort of reciprocal gift giving - than in standard chat sessions. "They have the sense that they're sharing an experience, not just exchanging information," said Elizabeth Churchill, who came to Yahoo from Xerox PARC and has an academic background in experimental psychology. The presence of social scientists has been unusual in Silicon Valley, but not unheard of. Around 1980, Xerox PARC began hiring sociologists, who quickly realized the company was wasting millions training its copier tech representatives in ineffective ways, said John Seely Brown, former director of the famous research center. He complimented Yahoo Labs' efforts, both because increasingly few companies pursue basic research in Silicon Valley - and fewer still are applying a sociologist's eye to a medium that is increasingly becoming a social phenomenon. "Today, you really have to take much more seriously what captures attention," he said. "Yahoo's next competitive advantage may be taking a different attitude toward this ... than Google, which tends to look at what they do as engineering efforts." Study raises eyebrows However, there are risks when a for-profit company adopts an academic approach, which calls for publishing research regardless of the outcome. Notably, one set of figures from a study conducted by Reiley, the economist from the University of Arizona, raised eyebrows at Yahoo. The research, conducted in partnership with an undisclosed national retailer, sought to accurately measure the impact of Internet display advertising across online and offline sales, by tracking people who had registered with both Yahoo and the store. The research found an approximately 5 percent increase in spending among those who had seen the ads - with 93 percent of those sales occurring in stores. The potentially worrisome thing, however, was that among those under 40, the percentage was nearly zero. That could reflect the unpopularity of the particular retailer among that demographic. Or it could underscore a growing immunity to display advertising among the Web-savvy younger generation. The latter possibility would do little to bolster Yahoo's sales pitch to advertisers hoping to influence this coveted age group. But raising such questions may be the cost of recruiting researchers committed to pure science. Photo by the San Francisco Chronicle.

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