Yahoo is giving away tools to mobile-app developers in a move designed to increase revenue from mobile ads, an area where the tech giant has fallen behind its rivals.
Yahoo is offering to distribute ads in other mobile apps besides its own, and plans to keep 40 percent of the ad sales on those apps. Besides that, Yahoo also is trying to plant its search engine inside other apps so it can display ads alongside the results.
The changes were announced Thursday at the company’s first conference for the makers of mobile applications.
CEO Marissa Mayer described the extension of Yahoo’s mobile platform as a “fork point” in her effort to make the internet company an even bigger player on smartphones and tablets. “Yahoo really fell behind the times in the evolution of mobile,” she told reporters and analysts Thursday. “I feel like we have really caught up now.”
The company generated $768 million in mobile revenue last year. That amount lags far behind mobile-ad leaders Google and Facebook, both of whom already run wide-reaching mobile-ad networks that deliver promotions to other digital services besides their own.
Powered by its dominant search engine, Google Inc. held a 37 percent share of the U.S. mobile-ad market at the end of last year, with social-networking leader Facebook Inc. at 18 percent, according to the research firm eMarketer Inc. Yahoo’s share stood at 3 percent, a gap that mirrors the same problems that the company has faced competing against Google and Facebook for digital-ad sales on personal computers for the past eight years.
Mayer, who helped build Google into a powerhouse, pledged to turn things around when Yahoo hired her as its CEO two-and-a-half years ago. Since Mayer’s arrival, Yahoo’s stock has soared because of the company’s lucrative stake in China’s rapidly growing Alibaba Group. Meanwhile, Mayer has struggled to rejuvenate Yahoo’s revenue growth, even though advertisers are pouring more money into digital advertising.
Yahoo plans to spin off its remaining 15 percent stake in Alibaba into a separately run holding company by the end of the year, a decision that will deprive Mayer of her financial crutch and intensify the pressure on her to boost revenue to keep investors happy.
Mayer’s biggest changes so far have been made in Yahoo’s mobile lineup, which had been neglected under previous regimes. Under Mayer’s leadership, Yahoo’s mobile team has ballooned from just a few dozen employees to more than 500 workers, and the company’s top apps have all been redesigned. Yahoo now says about 575 million people worldwide regularly visit its services on smartphones and tablets.
“It has been amazing to see how we transformed our business using mobile applications,” Mayer said in her opening remarks Thursday.
Much of Yahoo’s newfound success in mobile computing has been imported through the more than 40 acquisitions that Mayer has engineered during her tenure. The deals included last year’s $270 million purchase of mobile-analytics service Flurry, which is overseeing most of the technology behind Yahoo’s new toolkit for developers.
Yahoo’s stock gained 72 cents to close Thursday at $44.37.