Yahoo CEO Mayer Stresses Audience-Buying During First Earnings Call

Portal beats Q3 revenue estimates

Three months after taking over as CEO of Yahoo, Marissa Mayer opened up about her strategy. Kind of.

“In terms of vision, I think that my view is that the core of Yahoo is incredibly valuable and a great platform to build on,” she said during the company’s third-quarter earnings call on Monday. It was a bit of an empty statement, but Mayer did say she didn't plan to pivot the portal in an entirely new direction but would improve on its existing business.

Mayer is particularly looking to improve the technology powering Yahoo’s existing business: advertising. She homed in on programmatic buying as “an area where Yahoo needs to invest more," saying it’s important to have a system in place so that advertisers can set up a campaign in the middle of the night without needing a Yahoo employee to implement it. Yahoo’s current ad platform does that, Mayer acknowledged, “but it needs to be better.”

There have been reports that Yahoo is eyeing ad tech firms including demand-side platform/data management platform Turn, retargeting firm Criteo and supply-side platforms PubMatic and Rubicon Project as acquisition targets. Mayer declined to disclose plans for any acquisition, but said she would look for smaller ones, “something in the size and scale of double-digit millions and low hundreds of millions.” In September, the company publicized Mayer’s commitment to Yahoo’s ad tech platforms.

Mayer describe the portal as if it were the perfect porridge for the Goldilockses lining Madison Avenue. Other publishers are too granular when compiling audiences for advertisers to target, or not enough, whereas “our verticals aggregate users in a level of granularity advertisers understand,” she said. Those broad-but-defined content verticals such as sports, auto and travel “align well with advertiser spend,” she said.

But Yahoo needs to work on its ability to connect those users across verticals. “It’s hard to have a coherent view of the user,” Mayer admitted. She said compiling a user profile within one centralized platform that Yahoo’s various products can tap into to personalize the user experience across its properties “isn’t in place today and needs to be in the future.”

Mayer called out Yahoo’s home page as “one of the biggest draws on the Web.” And while Yahoo serves millions of different combinations of it every day, the company has “only scratched the surface” with how to personalize it for users and advertisers alike. “Ultimately, we want to be the favored partner of advertisers,” she said.

Not that Yahoo’s existing business is doing badly. Yahoo’s third-quarter revenue dipped by 1 percent year-over-year to $1.2 billion, but when excluding the payments made to attract visitors to Yahoo sites (traffic acquisition costs, or TAC), its revenue ($1.09 billion ex-TAC) actually beat analysts’ estimates. And Yahoo’s core advertising business, which generated 81 percent of the period’s total revenue, has actually been on an upswing. Display revenue grew for the second consecutive quarter, inching up 1 percent year-over-year to $506 million. Likewise search revenue increased by 1 percent to $472.5 million.

One analyst asked Mayer if she would prioritize Yahoo’s search or display business. Mayer hedged. “There’s potentially more upside in search,” she said at first. But afer winding through a discussion of advertisers’ attraction to audience-based buying, she concluded, “given the trend to audience-based buying, the display opportunity is particularly compelling.”