Yahoo’s Downward Ad Spiral Continues (with Visuals)

By Shawn Paul Wood 

marissa mayer

Change is mostly a good thing–unless you ask Yahoo CEO Marissa Mayer.

Last Tuesday, when Yahoo announced its second-quarter earnings, the company said it had reached an agreement with Alibaba “to reduce the number of shares it is required to sell in the initial public offering, to 140 million shares from 208 million shares.” This one would prove to be timely as those earnings show a four-percent loss from last quarter.


And why? Advertising, or the lack thereof. This is why Digiday produced four eye-catching (and jaw-dropping, if you are Mayer) graphs that further illustrate that downward spiral.

The aforementioned New York Times article shared the fact that Yahoo’s revenue from its display advertising business fell 8 percent last quarter, to $436 million, compared with the same quarter a year ago in large part because Google and Facebook continue to capture ever larger shares of the US display ad market.

Yahoo, once the top seller of display ads in the United States, is projected to drop to 6 percent market share, from 7.1 percent market share last year, even though the overall display ad market is expected to grow by 23.8 percent this year, according to eMarketer.

Not good for Yahoo. And now, there’s this:


Sure, Yahoo is selling more ads — 24% more. However, those ads are demanding less coin — 24% less. Coincidence? All that work is simply an exercise in futility because they are not keeping the lights on. So to speak.


Video. The premium sell for any website. This is Yahoo’s force field against the haters. As the website increases its video output, it should be able to charge more for advertising. The problem: who goes to Yahoo to watch video?


And then there is search, an area that has been a thorn in the side of Yahoo for years thanks to Google and Bing. While revenue from its search division increased 6 percent last quarter, Yahoo’s share of the the U.S. desktop search market has dipped to 10 percent according to comScore.


And there’s revenue quarter-after-quarter: flat.

Mayer is a changeling by most accounts. She is trying hard to make a difference but, as you can tell, there is no difference when it comes to advertising.