Yahoo's Display Revenue Falls Again, And Marissa Mayer Is 'Not Satisfied'

By
  • Facebook
  • Google Plus
  • Twitter
  • LinkedIn

marissa-mayer-no-satisfactionIn its second quarter, Yahoo sold 24% more ads compared to the second quarter of 2013, and yet the price per ad went down 24%, suggesting the company has been unable to stem the tide against declining CPMs. (Read the press release.)

CEO Marissa Mayer expressed disappointment in the company's display ad performance.

"Our top priority is revenue growth and by that measure, we are not satisfied with our Q2 results," she said. "Display remains an area of investment and transition. In Q2, we saw display revenue decline, further highlighting the fact that we need to work faster to ameliorate the negative trends. I believe we can and will do better moving forward," Mayer said. "Overall, I remain confident in Yahoo's future, our strategy, and our return to long-term growth."

While display media declined 8%, from $472 million to $436 million, overall revenue decreased somewhat less than that -- 4% year over year -- thanks to growth in mobile, native, and video along with modest increases in search.

Mayer gave two reasons for the decline in display ad revenues, which she said were unrelated to the "traditional PC display decline across the industry." The first was the delayed execution of audience transition to Yahoo Ad Manager Plus; the second was what Mayer described as "unfavorable mix shift" during which direct sales of premium exclusive content fell off.

During Yahoo's delayed transition onto Ad Manager Plus, buys on the existing platform Genome dropped, which affected revenue. Mayer expects continued hiccups until the global transition is complete, but said that responses from advertisers using the platform has been positive.

Yahoo Ad Manager Plus is a platform that Mayer described as “a completely new way to buy advertising on Yahoo.” This essentially means "get[ting] it to parity" with competing advertising technologies. "Prior to this, we didn't have real-time bidding, cost per engagement, cost per install, or the ability to create these kinds of custom segments," Mayer said.

But better late than never: Yahoo predicts that 80% of digital display ad spending will be bought programmatically by 2017, and hopes its impending platform will attract advertisers and publishers. Mayer said brands have "respect for how quickly we've moved the consumer perception" of Yahoo after years of underinvestment in its products.

Ramping up Yahoo Ad Manager Plus could help Yahoo better monetize its programmatic buys and weather the storm when premium buys drop, which leads to the second factor Mayer gave for revenue declines: the inability to fully monetize premium inventory.

To engage audiences and thereby attract advertisers, Yahoo plans on creating more premium content by investing in editorial products. Part of this effort is cosmetic: Yahoo for instance cleaned up the interface across its apps and various site properties, which Mayer said advertisers she's spoken with appreciate.

Direct buys have been Yahoo's historical strength and it plans to continue investing in this area and will try to create more premium inventory to attract premium advertisers. For instance, Yahoo hopes three new digital magazines created in Tumblr focused on travel, movies, and beauty will activate more advertising opportunities. It has also expanded its video inventory by purchasing, for instance, the sixth season of the show "Community" and live concert streams.

Mobile, native, and video grew 90% year over year. Mayer credits Yahoo’s new initiatives in those areas including Gemini for mobile-first, image-rich native ads. Sponsored posts on Tumblr are now promoted across the entire Yahoo network, which Mayer "one of the most meaningful integration opportunities we see between Tumblr and Yahoo."

Yahoo now has 450 million monthly active users on mobile, more than double the amount when Mayer came in as CEO two years ago. The next step for Yahoo, from a technological standpoint, is building products that can track the customer journey, including in-store purchasing, or link digital spend with TV spend. These solutions, however, will take many quarters to bear.

In the meantime, Yahoo just needs to get its Ad Manager Plus product up and running.

  • Facebook
  • Google Plus
  • Twitter
  • LinkedIn

Email This Post Email This Post

By on at

Leave a Reply