Yahoo, the multinational giant internet services corporation reported very good revenue in the fourth quarter of last year. This was due to the fact that Yahoo increased its display advertising charges in order to prove the estimates of investors & analysts totally wrong.
The company earned 32 cents per share resulting in a revenue of $1.22 billion in the last quarter, beating the estimates from Wall Street which forecasted 28 cents per share for a revenue of $1.21 billion. This affected the stock price of the company that rose by 5% in a few hours. On the other hand, it seemed that the advertising business of the company got affected to a large extent. Figures support this fact. The organization showed a 10% decline in advertising costs per year. Against this, the revenue generated by Yahoo Search increased by 14% per year.
These reports came in the midst of the watch that investors & analysts have kept on Marissa Mayer, newly appointed Yahoo CEO. Coming to power last July, Marissa took some major steps to change the whole scenario by signing agreements with CBS & NBC, got two developers for mobile applications on board & sanctioned redesigning of Flickr & Yahoo Mail. She also added a perk system to the company by offering free iPhones as well as free lunches.
The long term strategy of Mayer is to make Yahoo a part of people’s lives. Acknowledgement was in the form of the Yahoo stock shooting above $20, the highest since 2009. Marissa Mayer is fully credited with the overall revenue increase which gives hope that the company will be able to overcome the declining display ads scenario. Display advertising is a market which is expected to go up to $17.7 billion towards the end of this year, according to reports by EMarketer Inc. Efforts by Yahoo can be seen in the appeal made to advertisers to invest in ad promotion tools & deliver them to consumers. By providing real time data to the advertisers, the ads can be targeted to the right audience.
According to Mayer, Yahoo is currently working on web content personalizing through a technology that can feed the content to the consumers directly on their mobile devices. Mayer also added that an Interest Graph can now be created through user data which displays connections between people. After the arrival of Marissa Mayer, Yahoo’s share of display advertising has faded. It came down to 9.3% last year compared to 11% in 2011. In comparison Google’s display advertising share rose to 15% while Facebook’s share climbed to 14%. This year, as predicted by EMarketer Inc., Google’s advertising share in the US market will be 18%, Facebook’s 15%, & Yahoo will further decline to 8%.
As discussed above, Yahoo’s display advertising future looks poor when we look at the entire internet industry. There was a time when the company dominated in terms of search tools & email. But it has failed in the case of tablets & smartphones. It will be interesting to see what the new CEO can do in order to manage the ups & downs taking place in display advertising.
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