Yahoo is cutting more than fifty percent of the jobs in its advertising branch, which means 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 successful.
CEO Jim Lanzone emphasizes 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 strategy.
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. The company wanted to compete with the advertising platforms of Google and Meta. Lanzone says the company invested a lot in this, but in practice it did not yield enough. That is why the company will now discontinue the integrated advertising platform.
Not all advertising staff will have to leave the company, because 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 instead of selling it, partly because it fears that the buyer will force it to use that SSP in that sales agreement. The company wants to work with multiple 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 fired this week. The remaining six hundred people will have to leave in the second half of the year. Asset manager Apollo acquired Yahoo two years ago for 4.15 billion euros. Yahoo includes AOL, Engadget and TechCrunch.
Last month, the US government, together with eight states, decided to sue Google for its monopoly position in the advertising market. The authorities want Google’s advertising parts to be split up because the company is allegedly abusing its market position. Google’s behavior prevents competitors from gaining a foothold, according to the authorities. Lanzone doesn’t mention this in the interview, but it could be an explanation for why Yahoo’s attempt with the advertising platform failed.