Yahoo Reports Q4 Results; Mayer To Take The Reins In Driving Ad Revenue

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Marissa-MayerDuring Yahoo’s Q4 2013 earnings call Wednesday, CEO Marissa Mayer said the company intended to focus next year on mobile, social, video and native, and explained why former COO Henrique de Castro will not be replaced.

Display advertising, excluding traffic acquisition costs, was $491 million, down 6% compared to $520 million for Q4 of 2012. Display revenue excluding traffic acquisition costs (ex-TAC) was $1.7 billion for the full year of 2013, a 9% decrease compared to $1.9 billion for the prior year.

Full-year revenue was $4.7 billion, down 6%, and net income was $590 million, up 4%.

Yahoo said search revenue ex-TAC was $461 million for Q4 2013, up 8% compared to $427 million for the fourth quarter of 2012. And search revenue ex-TAC was $1,699 million for the full year of 2013, a 6% increase compared to $1,611 million for the prior year.

Yahoo’s stakes in Chinese ecommerce giant Alibaba and separately owned affiliate Yahoo Japan both contributed approximately $222 million to Yahoo’s bottom line this quarter, up 49% from the same quarter in 2012.

Yahoo surpassed 400 million monthly mobile users in Q4, Mayer said, adding the company is strengthening its mobile ad offerings. Its Stream ads are one of the primary ways the company is monetizing the mobile channel and the ad format will be integrated into more Yahoo properties, Mayer said. She also conceded that its mobile revenue is “still not material,” although its growth trend is “promising.”

With video offerings, the company will continue to focus on providing personalized video experiences. For social media and native advertising, Mayer said Yahoo’s new sponsored Tumblr posts are showing positive results, with the average sponsored post being reblogged 10,000 times, whereas an average Tumblr post is only reblogged 14 times.

When pressed for details from analysts about the decision to fire former COO Henrique de Castro, Mayer commented that “ultimately Henrique was not a fit and that was a very regrettable conclusion.”

Mayer also said that the company will not be replacing de Castro. “We have a very strong sales team and a strong sales leadership team,” Mayer said. “And this gives me the opportunity to be much more involved with revenue as we drive towards revenue growth.”

And while 2013 was about “doing many small but important things,” 2014 is about “doing bigger things in key areas of growth with fewer changes, but each larger and more strategic,” Mayer said.

In terms of driving more ad revenue, advertisers are interested in Yahoo’s ability to leverage its first-party data, according to Jason Pope, VP of AOD Mobile at VivaKi.

“Yahoo has done a nice job revamping some of their apps … which should lead to a nice blend of mobile Web and in-app inventory. However, their key value proposition will ultimately be their ability to leverage first-party login data for cross-screen campaigns in a scalable manner,” Pope said. “They also need to focus on mobile rich media and location data. This is really an issue of leveraging the assets they have as a big mobile Web and app publisher.”

Tim Dunn, director of strategy and mobile at digital agency Isobar, noted that the new sponsored posts on Tumblr may allow brands to push their content in a more creative way, but warned that scale might be a challenge.

“Tumblr's new sponsored posts will likely be a hit ­ with rich engagement facilitated by the site's users … [but] Yahoo has so many properties—food, music, TV just for starters—that outlining one ‘native proposition’ is going to be difficult to define, and then deliver at scale,” Dunn said.

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