Yahoo online ad revenue to plunge this year: forecast

Troubled Yahoo’s online advertising revenue will drop sharply this year, according to a forecast by research firm eMarketer. The research company predicts Google and Facebook will continue to see digital ad growth.

Worldwide, Yahoo’s online ad revenue will decline about 14 percent to $2.83 billion this year, from $3.28 billion last year and $3.44 billion in 2014, according to eMarketer. That fall would cut Yahoo’s share of the global digital ad market to 1.5 percent, from 2.1 percent in 2015.

Yahoo, which is facing an activist-shareholder revolt and is moving toward a possible sale of its Internet business, will suffer declines this year in both search advertising and display advertising revenue, eMarketer projected. Search ad revenue will drop to $1.41 billion from last year’s $1.62 billion, and display ad revenue will fall to $1.41 billion from $1.67 billion, the research firm said.

Google, overwhelmingly the biggest player in the worldwide digital ad market, will see online ad revenue rise 9 percent this year, and Facebook’s net ad revenue will climb 31 percent, according to eMarketer. Google’s total digital ad revenue will hit $57.8 billion this  year, the research company predicted. Facebook will continue to lead Google on display ad revenue, with $22.37 billion in 2016, compared to Google’s $10.23 billion, according to eMarketer.

Yahoo has pledged to cut 15% of its workforce, or 1,600 employees, by year’s end. Earlier this month, it cut Yahoo Games after 18 years; Yahoo Livetext; the BOSS search product for Web developers and website owners; Yahoo Astrology in a number of countries; and Yahoo Maktoob, a subsidiary focused on the Arab world. Last month, Yahoo shuttered seven digital magazines, and laid off more than 400 California workers, from software engineers to senior managers.

“As Yahoo trims down its legacy business to focus on MAVENS [mobile, video, native advertising, and social media] we expect the company to shrink in size relative to its competitors,” said eMarketer senior forecasting analyst Martín Utreras. “A leaner Yahoo, more focused on its core growing segments, will still face stiff competition in an ever more crowded and sophisticated market.”

The research firm pointed to a single bright-ish spot for Yahoo – mobile. Yahoo’s mobile ad business will grow 24.5 percent this year to $1.31 billion, eMarketer predicted. But put the struggling Internet firm up against major rivals and the bright spot dims: Google and Facebook will increase their mobile ad revenue by larger percentages than Yahoo, shrinking Yahoo’s market share to 1.3 percent in 2016 from last year’s 1.5 percent, according to eMarketer.

In an earnings call in February, Yahoo CEO Marissa Mayer said the “MAVENS” generated $1.6 billion in revenue in 2015, “essentially from zero,” and that number was expected to rise to $1.8 billion this year. Absolute revenue, however, will “face pressure” this year from declining “legacy” advertising formats such as banner ads, Mayer said.

Yahoo’s stock has been climbing since it bottomed out Feb. 11 at $26.97 after a lengthy slide from November 2014’s 10-year high of $52.62. On Wednesday, Yahoo stock closed at $34.80.

Yahoo declined to comment on the eMarketer forecast.

Photo: Yahoo CEO Marissa Mayer (ROBYN BECK/AFP/Getty Images)



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  • sanoran_t

    Tumblr will save Yahoo. Marisa Mayer paid $1,000,000,000 for the blog. The Tumblr dude will give some of the money back to Yahoo. Yahoo will be profitable again. Also, all the freeloaders on Tumblr will start clicking on ads and start buying things. Tumblr ad revenue will sky-rocket. We will be all tumbling about all day.

    just kidding 🙂

  • Jat Tan

    No more Yahoo Games? Then what else is Yahoo for? You can’t even click on an article nowadays without getting redirected to another website.