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Yahoo Poised to Pass Twitter in US Mobile Ad Share by 2015

Media giant takes advantage of mobile audience, but challenges remain

December 4, 2014 | Media Buying

Yahoo’s US mobile ad revenues are not only material now, they’re significant, according to a new forecast from eMarketer. Yahoo reported its mobile revenues for the first time in Q3 2014, and eMarketer estimates that the company will take nearly 3.2% of the $18.99 billion US mobile advertising market in 2014, launching itself into the mix as a competitor.

Net US Mobile Ad Revenue Share, by Company, 2013-2016 (% of total and billions)

Next year, Yahoo’s US mobile ad revenues will account for 3.74% of the country’s mobile ad market, pushing past Twitter for the first time—which will take 3.69% share in 2015—according to eMarketer. By 2016, Yahoo’s share will near 4.2%, which still trails Google and Facebook by a wide margin. However, the company’s 1-percentage-point gain from 2014 through 2016 represents the largest among companies that we tracked for this latest forecast.

Overall, eMarketer estimates that US mobile ad spending will grow 50.0% next year to reach $28.48 billion—and another 41.0% in 2016 to hit $40.16 billion.

Net US Mobile Ad Revenue Growth, by Company, 2013-2016 (% change)

Yahoo’s efforts over the past couple years to build traffic and engagement are finally paying off, as its revenues will continue to increase more quickly than the overall market. Yahoo’s net mobile ad revenues in the US will leap 76.4% next year, eMarketer estimates, and 57.8% in 2016.

We don’t expect Yahoo—or anyone—to catch Google or Facebook any time soon; however, those giants are poised to lose share as their mobile businesses mature amidst continued rapid expansion in the market. Both companies are expected to grow more than 40% next year and remain strong in 2016. But other players like Yelp and Amazon will maintain a faster growth rate than the overall market, and companies in the “other” category—which includes companies like Microsoft and AOL, for example, which have not yet broken out mobile revenues—are also gaining traction and stealing share from the two market leaders.

But the big picture is not completely rosy for Yahoo.

“Yahoo’s growth in mobile is a very positive development for them as they try to play catch-up, but these revenues are growing from a small base, and Yahoo’s overall ad business is still struggling,” said Martin Utreras, senior forecasting analyst at eMarketer. “They’ve trailed their competitors while taking a long time to monetize mobile, and these revenues are still muted in relation to the size of their mobile audience.”

Net US Mobile Display Ad Revenue Share, by Company, 2013-2016 (% of total and billions)

For example, Yahoo’s mobile display advertising revenues are bucking its trend of declining display ads overall, but in 2014, the company will take just 1.9% of the nearly $9.65 billion US mobile display ad market. By 2016, that share will almost double to 3.6%, but Yahoo will still trail Twitter, Pandora and Apple’s iAd on the display side.

Meanwhile, Yahoo’s share of mobile search is higher than its share in display but won’t grow so quickly. This year, the company will grab 4.9% share of US mobile search advertising—a portion that will rise marginally to 5.2% in 2016.

eMarketer bases all of its forecasts on a multipronged approach that focuses on both worldwide and local trends in the economy, technology and population, along with company-, product-, country- and demographic-specific trends, and trends in specific consumer behaviors. We analyze quantitative and qualitative data from a variety of research firms, government agencies, media outlets and company reports, weighting each piece of information based on methodology and soundness.

In addition, every element of each eMarketer forecast fits within the larger matrix of all its forecasts, with the same assumptions and general framework used to project figures in a wide variety of areas. Regular re-evaluation of each forecast means those assumptions and framework are constantly updated to reflect new market developments and other trends.

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