Yahoo in Trouble Even as Digital Advertising Spending Hits Record

Summer of 2012 appeared to be a good time for a former giant of the web. Yahoo had hired a new CEO to bring the company back into e-prominence. Marissa Mayer has been working as Yahoo’s CEO for almost 6 months. The media and many analysts were cautiously optimistic about the change, but recent news shows that things may not be going as smoothly as Mayer might have hoped they would, even as ad spending rose in 2012.

Yahoo’s Traffic Woes

Internet portal Yahoo is one of the most popular destinations for internet denizens. However, news out yesterday afternoon shows that traffic is dropping drastically for Yahoo. According to Owen Thomas at the Business Insider, out of the three main sources of traffic for Yahoo – search, mail, and the main page – “two out of three of those are declining precipitously fast.”

Search traffic ended down 24 percent from December of 2011 to December of 2012; mail traffic was down half as much. This is not a promising pattern for the struggling company. Unfortunately, as Kara Swisher writes for All Things D, “for many years, traffic to those important consumer destinations of Yahoo has been on a clear and unstopping decline.”

The company has even cut their metrics slides with much of this information out of their quarterly presentations. Whether that’s to avoid panic and keep perceptions strong, I don’t know. I won’t pretend to know what Yahoo should be doing – if I knew I’d be offering my services for a hefty fee – but hopefully Mayer sees something the general public doesn’t and plans to capitalize on it.

Some Bright Spots

 Kara Swisher goes on to note that some of Yahoo’s smaller units, like Flickr, have seen excellent growth, up 37 percent in unique visitors. Unfortunately, Flickr does not make any money for Yahoo, like ads and search do.

Yahoo’s mail service and their homepage have both been receiving a lot of love from Yahoo’s programmers and designers. It appears they are doing everything they can to turn those traffic numbers around. As Kara writes, the homepage “has a decidedly more mobile and social fee” which is definitely the right direction to be heading as mobile and tablet browsing will continue to rise. The trick will be making money off of mobile, as the aforementioned three traffic sources make up “most of its current monetization,” says Kara.

Good News for the Rest of Us

On a similar note, if I were Yahoo, I know I would be frustrated to know that global digital ad spending continues to grow as my traffic dropped. But for the rest of us, the news that “global digital advertising spending broke $100 billion for the first time” as Todd Wasserman writes on Mashable is great news.

Digital’s stronger growth demonstrates the importance of having an online presence and leveraging the web to bring you customers and conversions. Surprisingly, “the biggest growth is happening outside of the so-called mature markets.” It’s up 55.8% and 38.4% in the Middle East and Africa, respectively.

Future Looks Good

Global digital ad spending is predicted to continue its double-digit growth for a few more years and then settle into single-digit growth. Either way, growth is good. There is plenty of opportunity out there for agencies and small businesses to take advantage of. Let’s all hope we lack the traffic woes of Yahoo this year.

Do you think Yahoo can turn its traffic numbers positive?

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Patrick currently lives in Somerville, Massachusetts, where he is studying for a Master's Degree in Intercultural Relations. Upon graduation from Penn State in 2008, he spent two years overseas in Kyrgyzstan with the U.S. Peace Corps. While writing is currently his chosen way to put food on the table, he loves fitness and exercise, which he believes makes up for his avid computer gaming habit.

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