Marissa Mayer Finally Has A Plan For Yahoo To Steal Ad Revenue From Facebook And Google
REUTERS/Denis BalibouseNext month Marissa Mayer plans to unveil Yahoo's plan to seriously take on Google and Facebook in the mobile advertising stakes, according to a report from The Information.
Sources familiar with the matter told the The Information that Yahoo will announce a self-service platform for marketers to place ads across the Flurry mobile app network - which includes major app publishers such as The Guardian and games developers such as Pocket Gems and Glu - at its inaugural mobile developers conference in February.
It will do that by combining Flurry - which, since it was acquired by Yahoo last summer, has been more focused on giving developers the chance to earn ad revenue from their apps - with Yahoo's mobile ad buying platform Gemini. Beforehand, Gemini only offered ads across Yahoo's own properties, but, if The Information's sources are reliable, it will soon act as an ad buying platform to rival the likes of Facebook's Audience Network and Google's AdMob.
If Yahoo is to make a serious - and immediate - dent into Facebook and Google's mobile advertising share, it can't rely on its own content platforms alone, which is why this announcement is so significant. While it owns blogging platform Tumblr - which is estimated to make $100 million in revenue this year - its own-branded content sites like Yahoo News and Yahoo Finance are still popular on both desktop and mobile in terms of visits according to comScore. But they are somewhat dated relics of the dot com bubble era, and are under threat from newer players. Flurry allows Yahoo to offer a wider, probably younger and more attractive audience from already popular and growing apps to add to its own properties like the Yahoo Weather app and Yahoo News app.
That isn't to say Yahoo is not performing well on the mobile advertising front to date. In its most recently reported quarter, the company revealed it had generated $200 million in mobile ad revenue, 17% of total revenue. Yahoo estimates that total mobile revenue will experience strong growth, topping $1.2 billion for the 2014 financial year, driven by native, search and in-app ad formats in particular. Total revenue at Yahoo was up just 1%.
eMarketerEmarketer also predicts Yahoo will overtake Twitter to become the third biggest player in the US mobile advertising market in 2015. But Yahoo's predicted 3.74% share of the US mobile ad market for 2015 is still far behind Facebook and Google, which are estimated to have 17% and 35% shares next year respectively.
In the background, Yahoo is also reportedly in talks to acquire video ad tech company BrightRoll. Such an acquisition would give Yahoo lucrative video inventory to add to its ad stack, making it a more rounded all-in-our proposition than almost all its current major competitors, bar perhaps Google.
Adding to the stack will be crucial if Yahoo is to turn around a long-term decline in its overall display ad revenue. Mobile growth is needed, but mobile ads are still (somewhat counterintuitively) priced lower than desktop. The Yahoo display ad network is still the second biggest ad network, behind only Google, according to comScore. But its influence is waning.
Mayer has often been criticized for her "acqui-hire" strategy: Making a number of talent-driven acquisitions of (often) small startups that don't appear to have added immediate value to Yahoo's core business. The grace period of her tenure and many of those acquisitions is now over. If Yahoo can begin making meaningful revenue by combining its $200 million acquisition of Flurry with its in-house Gemini platform, Mayer might be able to quieten at least some of those critics.
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