Blog Post

Yahoo Revenues Hobbled By Hobbled By Display Ad Sales Changes

Yahoo (NSDQ: YHOO) pinned its 23 percent revenue decline on the divestiture of HotJobs and on changes to the search agreement with Microsoft (NSDQ: MSFT). Aside from the absence of HotJobs, which was sold to recruitment site in Feb. 2010 for $225 million, CEO Carol Bartz explained in a statement that display revenue was weak in the second half of the quarter because of “comprehensive changes we have made in our sales organization to position ourselves for more rapid display growth in the future.” In other words, display may still be surging elsewhere, but things will be slow for Yahoo for a while. More to come

During the quarter, Yahoo was eclipsed by Google (NSDQ: GOOG) as the display ad leader, according to an IDC report in May. Even worse, Yahoo has to contend with a resurgent AOL (NYSE: AOL) and the emerging Facebook on the display front.

The company and its embattled CEO haven’t been sitting idly by though. In addition to restructuring its ad sales force, Yahoo has done a number of things that are designed to reposition itself, such as offering a new version of its e-mail (unlikely to unseat GMail there) and introduced Yahoo App Search for the PC and Yahoo AppSpot, which is something of an app discovery offering for iPhone and Android users. Yahoo has also worked with Benchmark Capital to form Hortonworks, which runs the open source Apache Hadoop technology.

While those efforts could help it keep pace with the competition and maintain its relevancy, two recent acquisitions are designed to turn the revenue picture around and give both AOL and Google a run for their display money and traffic.

In April, Yahoo bought GetGlue-like TV check-in service IntoNow.

Even more notable that that deal, Yahoo’s May purchase of online ad alliance 5to1. The alliance lets premium brand advertisers purchase unsold premium inventory on the sites of 20 major publishers. This sounds like a good first step, especially as Google waits for approval of its $400 million acquisition of supply-side platform AdMeld, which offers Google a better opportunity to dominate the sell side.