$137.8B U.S. ad spend for top 200 advertisers
Yahoo is bringing its native ads to other publishers' sites.
Last year Yahoo adopted the low-hanging-fruit version of native advertising, a form of ad that aims to mirror surrounding editorial content. Unlike BuzzFeed's sponsored listicles or The New York Times' brand-penned posts, Yahoo's native "Stream Ads" more closely resemble Facebook's Sponsored Stories in that they refashion display ads as content links within its sites' content streams. Now Yahoo is extending these ads outside of its own properties through a content recommendation system that helps publishers promote their own stories.
Publishers place Yahoo's content recommendation box on their sites' article pages to highlight their other stories, but the boxes also include Yahoo's stream ads, which are featured as sponsored links.
Yahoo's content recommendation box can be found on Vox Media's SB Nation as well CBS Interactive's GameSpot and TV Guide sites. Like a traditional ad network deal, Yahoo is giving publishers a share of the money it makes from people clicking on the ads, according to a person with knowledge of the matter.
"CBS Interactive is using Yahoo to serve relevant content and ads across its network of premium content," a Yahoo spokeswoman said in an emailed statement, declining to elaborate.
Yahoo's content recommendation box, which appears on both desktop and mobile sites, looks like the content marketing packages that companies like Outbrain and Taboola place on publishers' sites. Those appear near a page's main article and link to other stories from around the web that someone might be interested in reading. They also usually include links that companies pay for in order to promote their pages or brands. But Yahoo's box only shows the publisher's own content plus a Yahoo native ad.
The native ad network would be one way for Yahoo to take advantage of advertisers' interest in its so-called native Stream Ads and offset the company's years-long display revenue declines. Yahoo's Stream Ads have appeared within the content feeds on Yahoo's owned-and-operated sites since they were introduced in April 2013. Their placement and design -- which closely mirrors the unpaid content for which people visit sites like Yahoo -- have made them a hit among media buyers. Stream Ads accounted for 40% of the display ads Yahoo ran in the second quarter of this year, CFO Ken Goldman said during the company's most recent earnings call.
While Stream Ads have helped to spur advertiser interest in Yahoo's products, they have hurt revenue in dollar terms: Sales of Yahoo's more lucrative premium ads have declined as advertisers opt for the lower-priced native units. As a result, Yahoo's second-quarter display revenue declined by 8% from a year earlier, when it first rolled out Stream Ads. That quarter marked the seventh consecutive period of year-over-year declines for Yahoo's display revenue.
Yahoo executives have pointed to the company's off-Yahoo display ad business as a way to spur display revenue growth. During the company's first-quarter earnings call, CEO Marissa Mayer said the company wants "to grow our off-network business, which to date has been reasonably small on the display side." And Mr. Goldman said that Yahoo plans to run more on ads on non-Yahoo properties, though neither exec said whether Stream Ads would be included in those plans.
Yahoo has already tried to use Stream Ads to help boost sales of its mobile search ads. In February the company opened up a new ad-buying marketplace, called Yahoo Gemini, that let advertisers buy the company's mobile search and native ads through its automated ad-buying tool Yahoo Ad Manager. Gemini happens to be where Yahoo is getting the native ads for its content recommendation system.
Yahoo's ad-supported content recommendation tool isn't a full-blown native ad network. It doesn't, for example, place its Stream Ads within the article feeds on other publishers' sites. But it could be a stepping stone.
Yahoo hasn't tried to hide its ambitions for a native ad network. Last month the company agreed to acquire mobile ad network and analytics firm Flurry, which runs ads within third-party developers' mobile apps. At the time of the Flurry deal's announcement, Yahoo's senior VP-advertising technology, Scott Burke, suggested that the company plans to use Flurry to open up a mobile ad network running Yahoo's native ads in third-party apps.