/// Life Is But a Stream at Yahoo These Days — But Will It Revive Ad Revenue?

October 13, 2013  |  All Things Digital


If you look on any major destination content property on Yahoo these days — Finance, Sports, News — you get the picture pretty quickly. The presentation is a slightly numbing and decidedly robotic experience, a major shift away from Yahoo’s formerly edited and livelier content pages, removing almost all feeling that humans touched the page and underscoring that computer algorithms are now firmly in charge. Other than changing topics and different color schemes, the key properties all look exactly alike, an endless scrolling feed of news, now mostly from outside sources, with in-stream ads inserted periodically that look very similar to the content. It’s the ads, in fact, that are the real point. Arriving in April, these “Stream Ads” are now everywhere across the Yahoo universe, even in Yahoo Mail. The sponsored and targeted content is akin to those you might experience in Facebook’s News Feed, which has always looked this way. The move to embrace this native ad format — which Yahoo claims “matches the content and context of the pages” and works across all devices, especially mobile ones — is CEO Marissa Mayer’s big gamble on turning around what has become a very dicey situation for the Silicon Valley Internet company’s ever-declining advertising business. “This IS her big play on the ad side,” said one person familiar with the efforts with in-stream ads at Yahoo. “Everything else is just a sideshow to her.” That sideshow is largely referring to the depressing and persistently declining trends in Yahoo’s display business. While Yahoo has been upping its premium efforts — such as a billboard unit that drops down on pages with noisy movie trailers or flashy smartphone come-ons — many inside the company acknowledge that this is unlikely to turn the tide. Consider: In the last quarter, display ad sales dropped fell 12 percent from a year ago, with overall revenue dropping seven percent to $1.14 billion. And Wall Street analysts do not expect any dramatically improved results in the third-quarter results, set to be announced Tuesday after the markets close. While online advertising performance across the industry, including at rivals Facebook and Google, continues to rise strongly and in double-digits, it is expected that Yahoo will show little to no growth in its core business. Analysts are estimating that Yahoo will have 33 cents in adjusted earnings on revenue of $1.08 billion, compared to 35 cents on $1.09 billion in the same period a year ago. Mayer, who has been in the job 15 months, has acknowledged the problem in several earnings calls so far, noting that she is first focused on building up talent and products, before any being able to show any lasting improvement in revenue. Helping her out massively to bridge the gap is the gift that keeps on giving from China, in the form of a large Yahoo stake in the Alibaba Group. Its upcoming and ever-rising IPO valuation has kept Yahoo shares rising dramatically. Eventually, of course, the impressive work of Alibaba execs will not provide the lift for Yahoo, which is where in-stream ads presumably come in. Yahoo execs, who declined to be identified due to Mayer’s stringent no-leaks policy, said that Mayer has hopes that native ads will be a “third marketplace” for the company and, in time, its greatest driver of new revenue.

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Life Is But a Stream at Yahoo These Days — But Will It Revive Ad Revenue?


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