Yahoo Ad Revenues Set to Drop Almost 14 per cent This Year

Tim Maytom

Yahoo.pngAd spending across Yahoo's ecosystem is set to drop to less than two per cent of both search and display spending as the troubled internet giant struggles to attract advertisers to its networks amid chatter about a sale of its core business.

According to a new report by eMarketer, Yahoo's worldwide net digital ad revenues are expected to fall 13.9 per cent this year, down to $2.83bn (£2.01bn), while rival firms including Google, Facebook, Twitter, Baidu and Alibaba all see gains.

Focusing on search, Yahoo's share of the market will drop from 2.2 per cent to 1.6 per cent, or $1.41bn in revenues, copared to Google's $47.6bn and Baidu's $8.7bn. Even smaller players like Microsoft and Chinese search engine Sohu will see growth in double digits, while Yahoo sees revenues shrink by 12.7 per cent.

In display advertising, the story is much the same. Facebook and Google lead the pack, with $22.4bn and $10.2bn respectively, while Yahoo only brings in $1.4bn, a 15 per cent drop year-on-year, and only 1.7 per cent of total display spending globally. Google will see a 13 per cent increase, year-on-year, while Facebook, Alibaba, Baidu and Twitter will all see growth of over 30 per cent annually, despite slowing down.

"As Yahoo trims down its legacy business to focus on its so-called MAVENs, we expect the company to shrink in size relative to its competitors," said Martín Utreras, senior forecasting analyst at eMarketer. "A leaner Yahoo, more focused on its core growing segments, will still face stiff competition in an ever more crowded and sophisticated market."

One area in which Yahoo is seeing positive growth in revenues is mobile, as it attempts to re-position itself as a more mobile-first business. It's mobile ad revenues are predicted to increase by 24.5 per cent this year, up to $1.31bn. However, as the industry as a whole accelerates, the company will see its total share of the mobile market continue to shrink from 1.5 per cent to 1.3 per cent, as other firms grow faster and new competitors emerge.