Yahoo Digital Ad Dollars To Drop In 2016, As Facebook, Google Grow
Yahoo ( YHOO ) will see a major drop in its digital ad revenue this year, even as rivals Facebook ( FB ) and Alphabet ( GOOGL ) unit Google watch their share grow, according to eMarketer’s latest ad spending forecast, released Wednesday. Yahoo’s worldwide net digital ad revenues will fall nearly 14% to $2.83 billion this year. That will cut Yahoo’s share of the overall digital ad market to 1.5% from 2.1% last year, eMarketer said. Both search and display ad revenue for Yahoo will drop by double-digit percentages in 2016, says the forecast. The Web portal’s display business will shrink to $1.41 billion, down 15.1% year over year, while its search business will decline 12.7% to $1.41 billion. Google, which dominates the global digital ad market, will see its net ad revenue rise 9% this year, while Facebook’s net ad revenue will jump 31%, says the report. “As Yahoo trims down its legacy business to focus on its so-called ‘Mavens’ (mobile, video, native ads and social businesses), we expect the company to shrink in size relative to its competitors,” said eMarketer analyst Martin 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 one area of growth for Yahoo is mobile, said eMarketer. Worldwide, Yahoo’s mobile ad business will grow 24.5% this year to $1.31 billion. Yet with rivals Google and Facebook poised to grow by even larger percentages, Yahoo’s share of the mobile market will shrink to 1.3% from 1.5%. Besides Facebook and Alphabet, Sunnyvale, Calif.-based Yahoo faced ad competition from companies such as Netflix ( NFLX ), Snapchat and Pinterest. Yahoo CEO Marissa Mayer is under fire from investors who are inpatient for profits and want to oust her from her job. The company has hired three investment banking firms to evaluate potential bids for the sale of its core Internet operations. The company has said it is looking at its strategic options and has been cutting costs, including laying off 15% of its staff and closing several offices overseas. Mayer’s turnaround plan for the company includes continued investment in “Mavens.” Rosenblatt Securities said on Monday that Yahoo could be facing a “take-under” — a buyout price lower than market value — from any of a number of private equity firms that might then dismantle the company. Much of Yahoo’s value comes from its holdings in China e-commerce giant Alibaba Group ( BABA ). Yahoo stock has fallen nearly 25% over the past year amid concerns about the company’s poor financial showing and its future prospects for growth. Yahoo stock, which touched a three-month high above 36 on Tuesday, was down 1.5% in midday trading in the stock market today , below 35.