Yahoo is losing share of search and display ad markets worldwide as well as at home in the US
Yahoo, which is set to report earnings this week, is looking at sizeable decreases in ad revenues according to eMarketer’s latest forecast of worldwide ad spending. And recent news about issues with the company’s email service, including both hacked passwords and news of an undisclosed surveillance program, isn’t helping.
eMarketer expects Yahoo’s ad business to decrease in size this year—and not for the first time. After a 3.5% drop in worldwide ad revenues in 2015, in September eMarketer predicted a further 10.2% decrease for 2016. We expect growth of under 1% next year, and 1% in 2018.
Yahoo’s search ad revenues are declining even faster, down 7.5% worldwide last year and set to fall another 16.6% this year. In 2015, Yahoo enjoyed 2.1% of the world’s net search ad revenues, and this year the figure will fall to 1.5%. Even after a return to (low) growth, Yahoo will continue losing share of the worldwide search market as other players—including Google, Baidu, Microsoft and Sohu—grow their search ad businesses more quickly.
Yahoo has a similar share of the worldwide digital display ad market: In 2015, Yahoo got 2.4% of net display ad revenues, and this year it will take in 1.8% of the total.
“With email at the core of Yahoo’s user base, we do expect recent privacy concerns to have at least some material effect on Yahoo’s display business in the future,” said eMarketer senior forecasting analyst Martín Utreras. “We still see a slowdown of growth in their ‘MaVeNS’ business—mobile, video and native advertising—driven by competitive forces, and a continued contraction of their traditional search and display businesses driven by consumers’ transition to mobile.”
In the US, Yahoo has a slightly larger share of the total digital ad market—estimated at 3.1% this year, down from 4.2% in 2015. Looking at display revenues alone, Yahoo will get 3.5% of the US market this year, along with 3.1% of the US search ad market.
Just under half of Yahoo’s US ad revenues this year will come from mobile—about in line with the mobile share at Google, but far below Twitter and Facebook, where more than 80% of ad revenues are now mobile. eMarketer expects net revenues from mobile placements to rise to 60.0% of Yahoo’s US ad business by 2018.
Still, even then, Yahoo is only expected to take in 2.3% of net US mobile internet search ad revenues, and 1.9% of the US mobile display ad market.