When GroupM Global Chief Digital Officer Rob Norman first met Yahoo CEO Marissa Mayer, she had finished a speech touting Yahoo as the place that, at that time, hundreds of millions of people a month go to do things like searching the web, checking email and catching up on news. That's a lot of people. But Mr. Norman was interested in how regularly those people are performing these so-called "daily habits" on Yahoo's properties.
"Whilst I understand there are a bazillion Yahoo Mail accounts, I'm interested to know how many are active, how many are people's principal email accounts," Mr. Norman said.
At its core, Mr. Norman's question is whether Yahoo is still a utility to a lot of people. Yahoo grew to its size because it was one of the original gateways to the internet. For many people who used its search engine, email service and news portal, Yahoo was the internet. And for advertisers Yahoo became an easy way to reach people on the internet. But Yahoo's utilities have been surpassed by similar products from Google and Facebook -- Google search; Gmail and Facebook Messenger; and the Facebook news feed, respectively -- and those companies have eaten into Yahoo's share of people's online attention.
Comparing ComScore's measurement of Yahoo's U.S. traffic in February 2013, the earliest available figures from comScore, against October 2015, overall traffic to Yahoo's sites has stagnated. And while search traffic has increased -- thanks in part to Yahoo's deal to be the default search engine on Mozilla's Firefox web browser -- the number of unique visitors to its home page and email service have declined, the latter historically being considered a big traffic driver for the former.
If Yahoo is no longer a must-use for as many people, then it's no longer a must-buy for advertisers. And that appears to be part of the reason why Yahoo's board this week is weighing whether its core business is still a must-have.
"The trouble for Yahoo is that no one is getting fired for not buying Yahoo," Mr. Norman said. He wasn't the only agency exec to say as much. Two others, who asked to remain anonymous to preserve business relationships, concurred .
"That's right: nobody gets fired for buying or not buying Yahoo," said one. "If you come to a client with a video plan and leave off YouTube or Facebook, someone will look at you like you're negligent. If you come with a plan for native but you left out Gemini [Yahoo's native-and-mobile-search ad marketplace], no one will bust your chops."
Visitors, not users
Yahoo doesn't appear to have users so much as it has visitors, and that's a big reason why it's in this predicament. Comparing ComScore's measurement of Yahoo's U.S. traffic in February 2013 against October 2015, the number of unique visitors to Yahoo Mail has declined by 16% to 71.7 million people. That decline and the stagnation in Yahoo's total traffic indicate that there may be a corresponding decline in visits by people who are logged in to a Yahoo account. That's a problem considering the direction that digital advertising is headed in.
Facebook can sell advertisers on its ability to place their ads in front of very specific audiences because it has collected a lot of data on its users and can connect that data to those individual users through their Facebook accounts. Yahoo has a harder time making that sell because not enough of the people who visit its properties are logged in to a Yahoo account.
"That's part of the reason why they've struggled to monetize at a faster pace in terms of their ad business," said eMarketer analyst Martin Utreras.
Yahoo has "an enormous amount of overall impressions that aren't served to persistently logged-in users," which means its ability to connect people across its various properties for ad-targeting and measurement purposes is "severely compromised," Mr. Norman said.
Yahoo declined to comment or provide numbers on how many of its visitors are logged in.
Yahoo is still valuable to advertisers because of its audience's size. More than 1 billion people visit a Yahoo-owned property each month, according to the company. And Yahoo has the third-largest online footprint of any media company in the U.S., according to ComScore. But value is relative.
While Yahoo's logged-in user limitation has lowered its position in media buyers' consideration sets, all three of the agency execs Ad Age spoke with for this article said they think Yahoo is actually under-valued among marketers. Too many are so preoccupied with millennials that they ignore the notion that, in Mr. Norman's words, "for many people Yahoo is Middle America's internet."
"If Yahoo remains a scaled business that has the attention of whatever level of a substantial number of Americans, then I think the spend on Yahoo is under-indexed. And my guess is it is," Mr. Norman said.