Yahoo just defined itself: It's an Advertising Technology company. Excellent!
Adam Rifkin stashed this in Yahoo!
In doing so, Yahoo just defined what it is:
Yahoo is an advertising technology company.
Yahoo will likely improve its content offerings so it has a great consumer draw.
But the business Yahoo is in is decidedly advertising technology.
That's what brings in the big bucks.
Yahoo wants to be number 1 in display advertising again.
If they're smart, Yahoo will build up their video advertising and mobile advertising products, too.
Expect Yahoo acquisitions along these lines very soon with some of that Alibaba money they just made.
The upside for Yahoo in keeping its "ad stack," as its portfolio of ad technologies is called by industry types, is that the technology could help the company get more out of its non-premium inventory.
Currently, non-premium inventory makes up 60% or so of Yahoo's display advertising revenues, according to research from Evercore Partners. Even a small lift in the rates Yahoo can charge for its non-remnant advertising goes a long way. Yahoo display revenues were $1.2 billion last quarter. Evercore estimates that as much as $760 million of that was remnant. If Yahoo's ad stack can improve its ad rates by 10% to 15%, there is the potential for an incremental $100-$200 million in the company's annual revenues.
If Yahoo could start increasing the ad rates of third-party publishers/partners/clients by 10% to 15%, it would, of course, have a very big business on its hands.
One former Right Media executive told us Mayer's plan is a "great idea" and that "the market will be rooting for them." But this source said that Mayer needs to focus on improving Yahoo's ad tech where it can be better than Google's. He suggested premium display and video ads.
"They won't 'out-Google' Google in ad serving or remnant biddable display, so they need to attack surrounding areas."
That's a good thing for Yahoo, this source says, because "the reality is, premium display, branded entertainment and premium content on video are much larger markets to own vs. remnant display and non premium video."
Another former Right Media executive put Mayer and Yahoo's billion-dollar ad-tech bet in starker terms.
"Keeping it is the easy part," says this source. "Making it competitive after years of stagnation will be the hard part. I hope they can."
Big bet. Big bet.
I wonder if she looked at yahoo, as saw not only stagnant search & stagnant advertising but the latent social network that's always been there, and thought, I can do what google's trying to do fairly straightforwardly: the puzzle pieces are all there. and more.
That's likely to be part of it, C.
The ad stack is very much a part of Yahoo's DNA, too, so it's not a radical shift for Yahoo to want to be number 1 in some forms of ad tech like display, video, and mobile.
Furthermore, Yahoo has the opportunity to do something there that Google cannot: namely partner with Facebook, Twitter, and LinkedIn. Marissa is friends with the leadership of each of those organizations.