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How Yahoo is trying to save its media business

Marissa Mayer
Jason Alden | Bloomberg | Getty Images
Marissa Mayer

Amid the layoffs, Yahoo's executives insist that the paring down of its media properties is all part of a master plan.

The tech company says it's now playing to its strengths — news, sports, finance and lifestyle — and working on developing its already-owned advertising technology products like BrightRoll, Yahoo Gemini and Flurry.

While it declined to comment on spin-off chatter — including the rumored Time, Inc. and private equity firm bid — executives insisted Yahoo is fully behind growing its media properties and had no plans to slow down. The current net worth of Yahoo's web business is estimated to be several billion, according to a recent report by Reuters.

"We're really in that spirit of simplification and focusing on fewer priorities, and making sure we're really good at those priorities right now," said Yahoo chief revenue officer Lisa Utzschneider. "We're focused on ensuring our platforms are delivering a seamless experience, both for our users and our advertisers. And, we're making sure we're making the most relevant connections to our marketers and consumers."

The company did not share its budget, but Yahoo's head of media Martha Nelson insisted that the company was making "significant and real investments" in the division beyond what it regained by laying off 15 percent of its staff in the beginning of February. Most of those cutbacks were made among media and marketing employees.

"What we have the opportunity to do is to expand and to grow in the areas of strength," said Yahoo's global editor-in-chief Martha Nelson. "If you're strong, you've got to be stronger. If you're dominant, be more dominant. And, that's really what we're doing right now."

To refocus its media strategy, it's made key hires in these areas, redesigned pages and increased coverage in its areas of focus. In sports, for example, Yahoo has recently hired 13 editorial staffers, including a team of eSports reporters. It also launched "The Vertical with Woj" early this year, a NBA-focused vertical.

Yahoo will also live-stream one MLB game for free each day this season — a total of 180 games — as well as up to four NHL games weekly. It could be a boon for advertisers, who are increasingly looking for ways to reach viewers who are cutting the chord or skipping commercials. Not only does sports still hold a large live audience, it also provides a way to reach one of the hardest-to-reach demographics, millennial males. Yahoo has had more than 30 brands partner with them since it streamed a live NFL game from London last year.

"We're very invested in creating rich experiences for consumers on any device, especially as we see more and more consumers watching that live baseball game on their smartphone," Utzschneider said. "We want to ensure a seamless and rich experience, and give marketers the opportunity to connect with those users wherever they might be."

Yahoo Finance is rapidly expanding its video offerings and staffing up. It will be growing personal finance coverage, especially since Yahoo has seen interest from a new audience — millennials — who like topics like debt management versus traditional investment advice. And, in April, it's using its livestreaming capabilities to the Berkshire Hathaway annual meeting, including a lunch break halftime show and a sit-down interview with chairman and CEO Warren Buffett, which will be translated into Chinese. Sponsors have been lined up, but not announced.

"I think it shows the real strength of Yahoo, which is we have the editorial power and connections to be trusted with something like that and the integrity, and also we have the technology that allows us to do something like that, which is quite ambitious," Nelson said. "There (aren't) that many people out there that would be able to pull it off in the tech-media field."

Nelson also teased plans for a new product for its lifestyle content, but said it was in the works.

That's not to mention its social media platform Tumblr, which now boasts 280 million users and an audience of more than 500 million people. Utzschneider called it a great space for native advertising and creative expression, noting that brands like Coca-Cola, Microsoft and Starbucks have purchased ads on the platform. The company remains completely invested in Tumblr, she emphasized.

To go with the premium content, Utzschneider said that Yahoo is also dedicating resources to increasing the integration of its programmatic ad platform, including delivering better data insights via information from mail, search, and its ad tech platforms Bright Roll, Yahoo Gemini and Flurry. It's put a high emphasis on addressing ad viewability issues and advertising fraud. Though these are issues that have affected the digital media industry as a whole, sources say Yahoo's programmatic advertising platform has been especially vulnerable to fraud issues. Yahoo denies those claims.

"In doubling down in ad tech and ensuring a great user and marketer experience, ad fraud is top of mind for us," Utzschneider said. "Every single day we think about how can ensure that we are delivering high-quality inventory. We have tons of mechanisms in place, where we're measuring it, tracking it. We're having ongoing conversations with our advertiser because their bar is really high."

The expansion seems real — and costly, especially hiring talent. Sources close to the situation say Nelson, who previously was the editor-in-chief of Time, Inc. but left shortly before its spin-off, was paid $2 million to join the team. Global anchor Katie Couric was rumored to have signed a $10 million a year deal in June to stay with the Yahoo. Yahoo declined to comment on Couric's compensation.

Perhaps more notable, the direction is a far cry from Yahoo's strategy of the past few years of unveiling glossy online sections and snapping up or creating millennial-focused tech platforms. Gone are Yahoo's food, health, travel, autos, parenting, Makers (a do-it-yourself section), and real estate "digital magazines." Content will still be aggregated from partners on those topics, but there will be less emphasis on original reporting. Livetext, its silent video messaging app that it unveiled last July, has been "deprioritized."

ComScore numbers have shown year-over-year declines in traffic. From February 2015 to February 2016, Yahoo News unique visitors dropped 11 percent, while Yahoo Sports traffic declined 16 percent. Yahoo Lifestyle content saw 42 percent fewer visitors. Only Yahoo Finance saw growth, a whopping 43 percent more visitors. (March 2016 data were not available at the time of this story's publication.)

ComScore did note that Yahoo properties were the third most visited digital media properties in February 2016, after Google and Facebook. Yahoo said that its customized comScore report shows the Yahoo-ABC News Network holds the #1 spot in total traffic at 128 million monthly users, which it has been in for the past four years.

The company pointed out it was still the leader in news, sports and finance. Yahoo also added that advertising revenue on its "mavens" — mobile, video, native and social platforms — grew 45 percent year over year, reaching $1.6 billion in 2015. Mobile especially was a huge driver of that growth, which accounted for more than $1 billion of traffic-driven revenue.


Martha Nelson
Getty Images
Martha Nelson

Richard Tullo, director of research for stock brokerage Albert Fried & Co., said focusing on a few verticals is a smart move, and he applauded Yahoo's growth in video especially sports. Still, he felt Yahoo had too many media properties.

"In terms of Silicon Valley companies, Yahoo is a hoarder," Tullo said. "They acquire these silos. Every once in a while, they get out of one or two, but like a hoarder the house quickly fills up to the curb."

While Tullo said he believes that Yahoo has a tremendous top line and consumer reach especially coupled with its programmatic ad platform, he feels it has a problem engaging readers, which in turn makes brands a little skeptical.

Tullo argued that Yahoo's problem was that it sometimes doesn't adequately promote its content. Example: Its deal to livestream a Live Nation concert each day from July 2014 to July 2015. It was an interesting deal, but Tullo pointed out it was difficult to find the content on Yahoo's website, nor was it promoted that well. He also pointed out that the homepage was too crowded with content, despite its redesign.

"You can be on as many verticals as you like, but you have to be able to execute on that vertical, because it's really beyond content," Tullo said. "Content is king, but it's really about experience. If you're not going to be able to provide the user with experience beyond what they imagined, the content has to be really good."

Correction: A chart in an earlier version of this article mislabeled Yahoo's traffic.