• by Mark Walsh  @markfwal, January 5, 2012

Turning to a technologist to lead its latest turnaround effort, Yahoo caught many by surprise by naming former PayPal president Scott Thompson as CEO Wednesday. Given that ousted Yahoo CEO Carol Bartz also brought a mainly technology background to the job, one might have expected the company to choose someone steeped in the media and advertising world in the Terry Semel mold.

Even so, advertising executives aren’t holding Thompson’s lack of a media background against him at the outset of his tenure. His strong resume in products and technology may help Yahoo regain an innovative edge, attract top tech talent and revive engagement by consumers.

But no one’s betting he’ll be able to pull it off -- especially since few were actually familiar with Thompson before Wednesday.

Everyone knows PayPal, eBay’s online payments unit, where Thompson has overseen a doubling of revenue over four years to $4 billion in 2011. The thinking: his e-commerce expertise and experience building consumer-facing technologies could translate well to the increasingly data-driven online ad world Yahoo occupies. 

“I think it’s Yahoo going back to its roots,” said Aaron Shapiro, CEO of digital agency Huge. "At the end of the day, Yahoo really is a tech company. They build apps and services and software for a digital world. Its failure over the last decade was how they lost their way and strayed away from that.”

Unlike Bartz, characterized by Shapiro as more of a “general business person,” he believes Thompson -- who was CTO at PayPal before becoming president and has had key technology roles at Visa and Barclays Bank -- has the technology-focused mentality to reignite innovation at Yahoo. One way his CV could benefit Yahoo in particular is the shift to programmatic ad-buying via ad exchanges and real-time bidding.

Adam Kasper, EVP, digital investments at Havas’ Media Contacts unit, suggested Thompson should start by rebuilding Yahoo’s sales force. After suffering significant turnover in its sales ranks last year, the company vowed to restore its once-shining reputation for agency relations. But Kasper said he hasn’t seen any sign of redoubled efforts by Yahoo to bolster ties to Madison Avenue.

“Priority No.1 is reinvigorating a broken sales organization and making them more energetic, creative, ambitious and flexible -- none of which they are right now,” said Kasper.

“Many companies, Yahoo included, need to make updates to their platform and systems to compete for marketing dollars moving forward. Thompson's product background could make him a wise choice,” noted Jordan Bitterman, social practice lead at Digitas. That focus, in turn, could help Yahoo stave off inroads made by Facebook and Google in the company’s core display business.

While Thompson said during a conference call Wednesday that he had no “informed opinion” yet about the display ad space, he emphasized the key role of data in delivering advertising effectively. “It’s still early days, but my instinct says that down in the data, we will find ways to innovate and compete that the world hasn’t seen yet,” he said.

At present, Thompson's immediate goal may be helping to sell Yahoo's Asian assets -- its stakes in China e-commerce company Alibaba and Yahoo Japan. However he chooses to tackle the reinvention of Yahoo, all agree he faces a daunting task.

Still, Thompson’s arrival could also give Yahoo a boost in another area where rivals like Google and Facebook are surging ahead: mobile. PayPal has gotten a growing proportion of its revenue from mobile transactions -- both in person-to-person payments and m-commerce. Earlier this year, the company doubled its prediction for mobile payments volume in 2011 to $3.5 billion.

In September, PayPal also unveiled an in-store mobile payment system and Thompson in a blog post laid out an ambitious plan to take on giants including Google, MasterCard and Visa in the race to build mobile wallet systems. Parent company eBay has also made mobile a key part of its growth strategy, with an estimated $5 billion overall in m-commerce volume this year.

Expect Thompson to carry over that keen focus on mobile to Yahoo. “Our intent is to be great across all devices, so the very first place people choose to go is Yahoo,” he said Wednesday, clearly enthused about the topic. He also called mobile “a bigger wave than people even imagine at this point.”

The push into emerging areas like mobile and a renewed dedication to technology development under Thompson could also help Yahoo attract top talent again. In recent years, it has been plagued by high turnover amid a series of reorganizations and uncertainty about its future. 

“If he can turn that tide, so that the best and brightest talent thinks of working for Yahoo instead of Google or Facebook, that’s a big win,” said Shapiro. “To me, that’s something he has a shot at turning around because he comes from the Silicon Valley world.”

Can anyone, in fact, revitalize a company that has become synonymous with a bygone Internet era and a crippling lack of corporate vision? “If there’s real buzz and energy from consumers about engaging with Yahoo, and everyone understands what Yahoo is from a communications standpoint," said Shapiro, "that’s the start of a turnaround."