In what can only be seen as more bad news for Yahoo! Inc. (NASDAQ:YHOO), analysts predict that Yahoo’s net search and display advertising revenues will shrink this year, in stark contrast to the rest of the industry which will only continue to grow.
Market research company, eMarketer, noted that Yahoo’s net digital advertising revenues will drop by a massive 13.9 percent from 2015, meaning the revenue will be $2.83 billion as compared to last years $3.28 billion. The net digital advertising revenues include both the search and display ad revenues. The net ad revenue that Yahoo gets is the net amount of advertising sales after paying off expense such as traffic acquisitions costs (TAC) to its partners.
This news is unlikely to be taken well by the company’s shareholders who have been trying not to put the business on the market with vulture investors prying and waiting for the moment Yahoo wants to change. Shareholders are still hoping for changes in the running of the company, so Yahoo does not have to be sold.
Yahoo’s market share will decrease from 2.1 percent last year to 1.5 percent for this year. The drop will be in the digital ad space market. This is in stark contrast to the growth that the other players in the market will experience. The search giant, Google, is expected to grow its net ad revenue by a massive 9 percent this year, to $57.8 billion, and social media network, Facebook, is expected to rise to $22.4 billion with a 31 percent growth rate, according to the research. The study also mentioned that other ad companies like Microsoft, Alibaba and Baidu were all expected to see growth this year.
Detailing Yahoo’s drop, the report notes that the decline will be seen on the two platforms of search and display business. According to the report, Yahoo’s net search revenue will drop to $1.41 billion in 2016, a 12.7 percent decrease from last year. The net display revenue will decline to $1.41 billion, a 15.1 percent drop, which will make both businesses fall below 2 percent market share.
Experts say the decline was expected because of the business strategy Yahoo has been implementing recently. Yahoo has been trying to move from search and display business and instead has been targeting rather mobile, video, native and social advertising, something they call MaVeN. This segment saw revenue for Yahoo jump 36 percent to $1.6 billion last year alone. The research company, eMarketer, sees mobile as the only positive for Yahoo with an expected growth of 24.5 percent.
However, the research shows that Google and Facebook will also grow its market share, and Yahoo’s market share will fall from 1.5 % to 1.3 %. EMarketer senior forecasting analyst, Martin Utreras said, “As Yahoo trims down its legacy business to focus on its so-called MAVEN’s, and we expect the company to shrink in size relative to its competitors.”
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