Yahoo hasn't had much luck growing its advertising revenue since Marissa Mayer took over as CEO. To boost its prospects, the portal is looking to non-Yahoo apps for revenue.
Yahoo is starting to sell search, video and so-called "native" ads within third-party mobile apps, the company announced on Thursday during its mobile developer conference in San Francisco. In short Yahoo has opened up a mobile in-app ad network seven months after acquiring mobile app ad-and-analytics firm Flurry.
Since taking over as Yahoo's CEO in July 2012, Ms. Mayer has prioritized converting the aging portal into a mobile company in order to catch up to rivals like Google, Facebook and Twitter. Yahoo has rolled out several mobile apps for its properties, introduced mobile-friendly ad formats, started automating the sale of its mobile search and native ads and pitched developers on ads to promote their apps. As a result of that work, Yahoo made $768 million in mobile revenue last year.
"Mobile for Yahoo went from being a hobby … to being core to our business," Ms. Mayer said on stage on Thursday, referring to the company's two-years-in-the-making mobile transformation. During a question-and-answer session with reporters, she added, "Yahoo was behind the times in the evolution to mobile. I feel confident now that we've caught up."
But Yahoo's mobile business has been unable to reverse the company's years-long display ad revenue decline. This is where the new mobile ad network comes in. These mobile in-app ad networks offer ways for major ad sellers like Yahoo to spur advertiser interest in buying their mobile ads by expanding the reach of those ads.
Through a new service called Yahoo App Publishing, Yahoo will syndicate several of its ad formats across Flurry's network of mobile apps that have opted in to display the ads. Those ads include Yahoo's so-called "native" text-and-image-based stream ads that appear within the portal's content feeds and video ads sold through Yahoo-owned video ad network BrightRoll. Advertisers will be able to buy these ads through Yahoo's mobile ad marketplace Gemini that automates the sale of its mobile search and native ads through eBay-like auctions.
In a question-and-answer session with reporters, Yahoo's senior VP-advertising products Prashant Fuloria said that Yahoo App Publishing will compete with other companies' mobile in-app ad networks by also pulling in ad buys from other ad networks but didn't specify which ones. Yahoo's Flurry-powered mobile ad network "doesn't have to be the only source of demand or revenue," he said.
Flurry CEO Simon Khalaf said his company's in-app analytics work enables Flurry and Yahoo to "understand app developers' audience and can cater ads to them." Flurry has a window into 630,000 apps to date that are used across 1.6 billion devices, the company said on Thursday.
Yahoo is also bringing its search ads to others' mobile apps as part of a larger bid to grow its search market share. Mobile app developers can now incorporate Yahoo's search engine into their apps. People will be able to search for the same information as they would find on Yahoo, and they'll also be presented with the same search ads as they would find on Yahoo.
Mobile app developers will be able to keep 60% of the revenue from ads run in their apps with the remaining 40% going to Yahoo, Mr. Khalaf said.
To make sure the money flows both ways, Yahoo is expanding its mobile app install ad business. A year after letting app developers buy basic app-install ads on Yahoo to drive downloads, app developers can now buy Yahoo's native and video ads as well as Tumblr's sponsored spots to promote their app across Yahoo and Tumblr. They can target the ads based on information like audience demographics, behavior and how they use mobile apps.