Lately it’s become all the rage to predict the withering and eventual death of display advertising on the Web (see Peretti, Jonah). But for the time being, even as online publishing continues to evolve from portals to search-centric content farms to search-portal hybrids to social publishers, the market for display ads shows little sign of vaporizing anytime soon. In reality, the overall buoyancy of brand advertising online continues to help keep everyone afloat, including the legacy portals, even as they grapple with major technology changes and rising competition from the likes of Facebook.
Witness Yahoo (YHOO).
In the midst of its most recent leadership crisis, the company’s sales force continues diligently to perform the unfashionable task of going out and selling truckloads of display ads to an array of major brands that should be the envy of every online publisher. Last year, Yahoo brought in an estimated $1.3 billion in display advertising in the U.S. market, according to EMarketer, up slightly from $1.2 billion in 2009. The company’s online advertising capability remains one of Yahoo’s few strengths, according to a recent analysis by Forrester’s (FORR) Shar VanBoskirk. “Yahoo! has tremendous traffic and user engagement globally which populates its monster user database that it is a pro at mining on advertisers’ behalfs,” writes VanBoskirk. “Its ad labs scale testing and optimization. Its reach and available inventory [are] massive.”
“I think Yahoo’s greatest priority right now should be to solidify its value to media buyers, as online advertising is its lifeblood and is at extreme risk of losing advertisers to options that are easier for them to grock,” she adds.
From 2009 to 2011, while Yahoo’s overall display ad revenue grew slightly in the U.S., its market share plunged from 15.4 percent to 10.8 percent, according to EMarketer. The drop was due in large part to the growth of Facebook (where display ad revenue in the U.S. soared from an estimated $518 million in 2009 to $1.7 billion in 2011, according to EMarketer) and Google/YouTube (GOOG) (where display revenue grew from an estimated $435 million to $1.7 billion over the same period).
To try to keep up, Yahoo is now aggressively chasing buyers in online video—the fastest-growing category of Web advertising, according to EMarketer, which estimates that the format will grow by a compound annual rate of 38 percent in the five-year span ending in 2015.
In April, Yahoo threw a digital upfront presentation for ad buyers in New York, spotlighting the company’s new slate of original video programming and the advertising opportunities therein. Along the way, the company announced a new weekly talk show to be hosted by Katie Couric, as well as Stunt Nation, a behind-the-scenes program about how people seem to do improbable things—such as a guy who appears to eat 30 tacos in 30 seconds.
Do ad buyers like what they saw? In response to an inquiry from Bloomberg Businessweek, a Yahoo spokesman declined to share specific sales numbers pegged to the upfront event, noting only that the company projects its growth for video advertising this year to outpace EMarketer’s industry estimate of 43.1 percent in 2012.
A company spokesman also sent a statement via e-mail:
While this first year of participating in the Digital Content Newfronts was primarily about perception shift and setting the foundation for the future, Yahoo! has had immediate interest from the advertising community, and we anticipate numerous follow-up meetings over the coming weeks with our top advertisers as a result of the Newfronts.
On April 30, Couric made her Yahoo debut with a nearly three-minute video investigating “the skinny on veggie chips.” A recent viewing came paired with a 30-second pre-roll ad for Poland Spring that was brimming with big-budget special effects and which redirected interested consumers to … Poland Spring’s Facebook page.
Considering the competition, if Yahoo can reverse its sliding share of the ad market in years to come, the company will perhaps deserve its own profile on Stunt Nation. Keeping pace with Facebook would be a much more amazing feat than, say, eating 30 tacos in 30 seconds.
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