Yahoo CEO Marissa Mayer.
Photograph by Mike Pont Getty Images

CEO Marissa Mayer blames “uncertainty around the sale process” for low demand for Yahoo’s ads.

By Erin Griffith
July 18, 2016

Yahoo has a lot of problems: Executive turnover, strategic missteps, angry activist shareholders, declining revenue, a business that investors value at less than zero. Oh, and a leaky sale process that has distracted everyone from the company’s attempts to turn itself around for most of this year.

Despite all that, Yahoo YHOO has one thing a lot of Internet and media companies are dying for: Attention. The company’s homepage still has a giant audience (43 million every day in the U.S.), its video content has a monthly audience of 198 million, and a few of its apps are popular and growing. (Tumblr remains hot with young people; Yahoo Fantasy Sports is a category winner.) The problem, according to CEO Marissa Mayer, is that demand for Yahoo’s ad products is weak.

Take Tumblr, which Yahoo bought for $1.1 billion and has now written down most of that sum. Tumblr has struggled to make money because demand for ads on the site has been low, according to Mayer. Yahoo has been trying lots of things to change that by, for example, bringing Facebook’s ad network and Yahoo’s Gemini ad exchange onto the platform. The company has even introduced classic display ads to Tumblr. The platform is seeing “lower prices because there is not as much demand, but we’re activating the right channels to address the fact that supply is outpacing demand,” Mayer said on the company’s second quarter earnings call Monday evening.

In other words, in a world where digital content creators are more desperate than ever to grab a sliver of our attention, Yahoo has plenty of the stuff. But advertisers don’t care.

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Mayer noted there’s a similar problem in online video, where ad buyers have a glut of content to advertise against.Over time, advertising dollars will follow where the users are spending their time, but its not unusual to see a lag like that. That’s why we focused on digital video,” she said. One decade and three CEOs ago, Terry Semel had a similar argument.

But today, the main reason Mayer believes advertisers aren’t interested in Yahoo’s ads is because of the “uncertainty around the sale process” that Yahoo is currently going through. In other words, the M&A auction that activist investors pushed Yahoo into because of its weak sales is weakening sales even more. It doesn’t help that the auction has dragged on for months. Pressure for Yahoo to sell started all the way back in December.

As such, Yahoo has spent the year in limbo. In February the company began officially shopping itself to buyers. Final bids from the three remaining bidders are due today. The remaining bidders, according to reports, are Verizon Communications VZN and two buyout groups— TPG and another led by Quicken Loans founder Dan Gilbert.

Meanwhile, just in case no buyer bids at a price that satisfies Yahoo’s activist investors, the company is also in the process of spinning off its large stakes in Alibaba baba and Yahoo Japan in a complicated “reverse spin” transaction designed to minimize taxes.

Mayer provided no updates on either deal, only to say that Yahoo yhoo is “deep into the process of evaluating proposals” and “making great progress.”

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