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Yahoo revenues drop as ads and search struggle

It’s all in the ads

Yahoo has reported another fall in revenues for the second quarter of 2013, with declining ad sales causing concern.

In the earnings report published yesterday, it was revealed that the company saw revenues drop by seven per cent compared to Q2 2012. Profits were up year-on-year by an impressive 46 per cent, which analysts attributed to huge growth at Alibaba, the Chinese e-commerce site part-owned by Yahoo.

However, perhaps most worrying for investors is the decline in two of Yahoo’s key offerings: display advertising and search. Revenue from display advertising was down 12 per cent on Q2 2012, with the number of ads sold decreasing by two per cent, and the price charged per ad declining 12 per cent. In a live webstream, CEO Marissa Mayer admitted “we can do better in display”.

Meanwhile in search, revenues from paid clicks declined by nine per cent, with price per click dropping eight per cent. However, the number of paid clicks increased by 21 per cent.

Mayer’s turnaround

The earnings report marks one year since Marissa Mayer became Yahoo CEO. She was tasked with turning around the ailing company’s fortunes, effectively rescuing it after several years of decline and a string of short-lived CEOs.

During her year at the helm, Mayer has focused on redesigning products, high profile acquisitions including Tumblr and Summly, and content partnerships with media giants. Yahoo’s stock has risen by 70 per cent in the meantime, and Mayer remains “encouraged” by the results, touting her changes as the beginning of a “chain reaction”.

Kleon West, business development director at theEword, commented: “Yahoo has made some positive strides under Mayer, but perhaps the longed-for turnaround will be slower than expected. Meanwhile, with search and display revenues continuing to fall, Yahoo’s development and investment in other areas may be a sign of things to come.”

Written by Rachel Hand

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