Plunging ad prices underscore doubts over Yahoo turnaround plan

Tue Jul 16, 2013 11:27pm EDT
 
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By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Marissa Mayer's plan to resuscitate Yahoo seems a simple one: get back the eyeballs, sell more ads and charge higher prices. But the chief executive's plan seems to have run into a major snag.

The price the company charges per ad slid 12 percent in the April to June period, six times the decline just a quarter ago - a fall that some say highlights how Yahoo has been caught unprepared for the industry shift to automated, programmatic ad buying.

Marketers increasingly prefer to buy online advertising space through automated exchanges, where prices are significantly lower, rather than paying top-dollar for premium ads sold by a Web publisher's salesforce. Ads offered by exchanges also allow marketers to aim ads in real time at specific audiences, such as by gender or age.

Yahoo's ad focus has, however, centered on "on developing media units that were much better for premium buys," said Shar VanBoskirk, an analyst with industry research firm Forrester Research.

Yahoo has its own programmatic ad technology with its Right Media exchange. But analysts say the exchange is not as popular as rival offerings, such as Google's DoubleClick exchange, which is considered the industry standard.

Google, the world's No.1 Web search engine, will report its second-quarter earnings on Thursday.

For many on Wall Street, the industry shift is one more reason means Yahoo's turnaround remains "an open question", especially given that Mayer has said the company remains first and foremost an advertising company.

During Tuesday's post-earnings conference call with analysts, Mayer said Yahoo was bullish on its advertising technology and that it planned to focus on improving various aspects of it in the coming quarters.   Continued...

 
Marissa Mayer, President and CEO of Yahoo, answers questions during the Reuters Global Technology Summit in the Thomson Reuters offices in San Francisco, California, June 20, 2013. REUTERS/Beck Diefenbach