Yahoo's Ad Slump Rages On, And CEO Marissa Mayer Still Can't Say Exactly When It Will End

Jan 28 2014, 8:17pm CST | by

Yahoo's Ad Slump Rages On, And CEO Marissa Mayer Still Can't Say Exactly When It Will End

Another quarter, another drop in ad sales at Yahoo. When’s it going to end?

That was the gist of virtually every question asked by analysts today at Yahoo’s fourth-quarter earnings webcast. Unfortunately, they didn’t get a firm answer from CEO Marissa Mayer.

After a seemingly unending string of quarters with declining display-ad revenues, they fell again, by almost 6%, to $491 million before the costs of acquiring traffic from website partners. As a result, Yahoo’s shares were down almost 6% in extended trading initially, after a 4% rise, to $38.22, in an up market. Later as the webcast continued, the recovered a bit but still down more than 3%.

Mayer provided little firm guidance on when display ads, which make up 41% of its overall revenues, would finally follow steady increases in traffic at the venerable Internet portal, up 20% over last year to 800 million users a month. In her initial comments on the webcast, Mayer did draw something of a line in the blowing sands, promising that its work on improving its services and increasing traffic will result in revenue growth this year, but probably not until the second half. Yet the company declined to offer a forecast for 2014 overall because, as Chief Financial Officer Ken Goldman put it, it’s still tough to “identify an inflection point” for growth.

Yahoo is seeing improving trends in the display business, with 3% more ads sold. But price per ad fell 7% because fewer premium ads were sold. The new “stream ads,” he said, could be significant especially in mobile. But none of this is apparent in the numbers yet.

In particular, Mayer added, mobile ad revenue is still “not material” despite revenues doubling. That’s at a time when Facebook, Twitter, and even Google are seeing big jumps in mobile ad revenues. Tumblr? Despite increases in traffic and some revenue in the second half, still–wait for it–”not material.” Not least, video ads remain “nascent,” she said. And while few companies besides Google with its YouTube site have significant video ad revenues yet, others such as Facebook and Twitter are clearly focused on this area as well.

This year will mark one potentially important change, however. Not only has Yahoo vowed that revenue growth is its No. 1 priority, but Mayer herself said–twice–that she would be focusing her efforts much more directly on the ads and media side of the business. That would be a big change from the past, when ad agencies and marketers have said they’ve felt ignored by the former Google executive.

Skeptics would say she had better get more involved, since she recently fired her chief operating officer and de facto sales chief, Henrique De Castro, whom she said today was simply “not a fit.” She also repeated that she won’t be replacing him. “This gives me an opportunity to be much more involved with revenue opportunities,” she said.

That’s encouraging to some observers. Forrester analyst Susan Bidel said in an interview that it’s clear Mayer intends to focus her fix-it engineering mentality to the media business, evident so far in her hiring New York Times stars David Pogue and Matt Bai and onetime Today star Katie Couric, as well as creating digital magazines intended to draw more lucrative image advertising from traditional magazines and television. “It’s very hard to turn around a big ship, but they’ve made a lot of good moves in that direction,” says Bidel.

Bidel notes that the display ad business “isn’t brain surgery” and should be eminently fixable with the right products and services to provide a better context for ads, whether they be the native self-service “stream ads” that appear in the central news feed or more flashy display and video ads Yahoo is clearly working on. Still, she says, it’s not yet apparent what’s going to get advertisers to return to Yahoo. “The whole display business is a little up in the air,” she says.

More than a little, actually. And unless Mayer can stabilize it, let alone grow it, she will face more investor scrutiny and impatience with every passing month.

Marissa Mayer

Source: Forbes Business


Don't miss ...


<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.


blog comments powered by Disqus

Latest stories

Finnish scientists identify new type of black hole
Helsinki, Oct 31 (IANS) Finnish researchers have discovered a new type of low-mass black hole, which is a bright celestial body that emits X-ray, the University of Turku has said.
Union Carbide ex-chief Warren Anderson is dead
Washington, Oct 31 (IANS) Warren Anderson, former chief executive officer of the Union Carbide Corporation, is dead, a media report said Friday. He was 92.
Himalayan Viagra fuels gold rush for local Tibetans
Washington, Oct 31 (IANS) Overwhelmed by people trying to find the prized medicinal fungus known as Himalayan Viagra, two isolated Tibetan communities have managed to implement a successful system for the sustainable harvest of the precious natural resource, suggests research.
Oceans were always there on Earth: Scientists
Washington, Oct 31 (IANS) Debunking previous theories that water came late to Earth well after the planet had formed, researchers have significantly moved back the clock for the first evidence of water on Earth and in the inner solar system.

Latest from the Network

Julia Stiles and Ray Liotta cast in Go With Me
Julia Stiles and Ray Liotta have been added to the cast of Anthony Hopkins' new film 'Go With Me'. The action-drama, which will begin shooting in mid-November, tells the story of a young woman who returns to her home...
Read more on Movie Balla
Seth Rogen to star in Steve Jobs biopic
Seth Rogen is in talks to star in Sony's Steve Jobs biopic. The 'Bad Neighbours' star is in negotiations with the studio to take on the role of Apple co-founder Steve Wozniak - who created the Apple I computer and co-...
Read more on Movie Balla
Jennifer Lopez has struggled to love herself
Jennifer Lopez say she's spent much of her life beating herself up for not being good enough. The 'Dance Again' hitmaker, who has six-year-old twins Max and Emme with her third ex-husband, Marc Anthony, puts a lot of...
Read more on Celebrity Balla
Julianne Hough's teary tribute to sister
Julianne Hough broke down in tears while praising her older sister. The 26-year-old singer/songwriter made an emotional speech in which she praised her older sister, Sharee Wise, admitting her sibling inspired her to...
Read more on Celebrity Balla
Tom Parker vows to look after Lindsay Lohan
Tom Parker has vowed to look after Lindsay Lohan. The former Wanted star is keeping a watchful eye over the 28-year-old actress as she performs in play 'Speed-the-Plow' in London because he wants to help the flame-...
Read more on Celebrity Balla
Kaley Cuoco-Sweeting fell for husband over animals
Kaley Cuoco-Sweeting knew her husband was 'The One' because he loves animals. The 'Big Bang Theory' star, who married tennis player Ryan Sweeting in December after just six months of dating, admits she fell in love with...
Read more on Celebrity Balla
Orson Welles last film to be released
Orson Welles' final movie will finally be released next year. The acclaimed filmmaker had worked on 'The Other Side of the Wind' - which chronicles a temperamental film director battling with the Hollywood establishment...
Read more on Movie Balla
Game of Thrones stars get pay rise
'Games of Thrones' cast members will be paid $300,000 an episode. Five of the shows biggest stars - Peter Dinklage, Kit Harington, Lena Headey, Emilia Clarke and Nikolaj Coster-Waldau - have landed bumper payrises after...
Read more on Celebrity Balla
Mike Tyson: I was abused
Mike Tyson claims he was sexually abused as a child. The 48-year-old retired boxer was ''snatched'' off the street when he was seven by an ''old man'', who he never saw again after the shocking one-time incident....
Read more on Celebrity Balla
Amanda Bynes released from psychiatric facility
Amanda Bynes has been released from a psychiatric treatment facility. The 'Easy A' actress was spotted walking around Sunset Strip, West Hollywood, last night (30.10.14), 19 days after she was admitted to the hospital...
Read more on Celebrity Balla