Yahoo fires half of advertising arm, wants to no longer compete with Google
Yahoo is cutting more than 50 percent of jobs in its advertising division, meaning 1,600 employees will have to leave the company. The company worked on its own advertising platform to compete directly with Google and Meta, but this was not a success.
CEO Jim Lanzone stresses to Axios that the layoffs are not related to ‘financial challenges’, as so many other tech companies give as reasons for mass layoffs. Instead, Yahoo will cut 1,600 jobs, or 20 percent of all Yahoo jobs, as the company changes its advertising course.
The Yahoo for Business branch has been working since 2015 on an online advertising platform that allows advertisers to buy advertising space and publishers to sell advertising space. With this, the company wanted to compete with the advertising platforms of Google and Meta. Lanzone says that the company invested a lot in this, but that it did not yield enough in practice. Therefore, the company is now going to discontinue the integrated advertising platform.
Not all advertising staff will have to leave the company, as Yahoo will continue to sell ads on its own sites. However, the company is discontinuing the supply-side platform, which allows sites and publishers to automatically sell their advertising space to advertisers. Yahoo wants to shut down this platform rather than sell it, in part because it fears that the purchaser will force it to use that SSP in that sale agreement. The company wants to work with several SSPs in order to earn more money.
In addition, Yahoo will retain its demand-side platform, which allows advertisers to purchase advertising space automatically. The DSP branch will now be called Yahoo Advertising and will therefore work with more SSPs. That dsp has a turnover of billions, says Lanzone, and will focus on the largest companies worldwide.
The first thousand people were laid off this week. In the second half of the year, the remaining six hundred people will have to leave. Asset manager Apollo took over Yahoo two years ago for 4.15 billion euros. Yahoo includes AOL, Engadget, and TechCrunch.
Last month, the US government along with eight states decided to sue Google for its monopoly position in the advertising market. The governments want Google’s advertising parts to be broken up because the company would abuse its market position. Google’s behavior prevents competitors from gaining a foothold, according to the governments. Lanzone doesn’t mention this in the interview, but it could explain why Yahoo’s attempt with the advertising platform failed.