Here’s some more bad news for Yahoo.
Yahoo’s net search and display advertising revenues are expected to shrink this year, while the rest of the industry continues to grow.
According to market research firm eMarketer, Yahoo’s net digital advertising revenues, which includes both search and display ad revenues, will drop 13.9% this year to $2.83 billion, from $3.28 billion in 2015.
Yahoo’s net ad revenue is the amount of advertising sales it drives after paying off traffic acquisition costs (TAC) to partner sites, like Microsoft.
The shrinking business is unlikely to improve Yahoo’s standing with shareholders, as it tries to fend off activist investors clamoring for a change in management and a sale of the company.
The revenue decline means that Yahoo’s market share in the digital ad space will drop to 1.5%, down from last year’s 2.1%, it said.
That’s in contrast to the growth its competitors are projected to see. Google will grow its net ad revenue by 9% this year, to roughly $57.8 billion, while Facebook’s will increase 31% to $22.4 billion, according to the report.
Other companies mentioned the report, including Microsoft, Baidu, and Alibaba, are all expected to see revenue growth.
The decline is seen across both Yahoo’s search and display business. The report says Yahoo’s net search revenue will shrink 12.7% to $1.41 billion in 2016, while its net display revenue will drop 15.1% to $1.41 billion in 2016. Both businesses are expected to dip below 2% market share.
The drop is somewhat expected as Yahoo continues to move away from its legacy search and display businesses. Instead, Yahoo’s been doubling down on what it calls MaVeNs, short for mobile, video, native, and social advertising, a segment that saw its revenue jump 36% to $1.6 billion last year. In fact, eMarkter pointed out that mobile is the lone bright spot for Yahoo, forecasting its net revenue to grow 24.5% this year to $1.31 billion.
But it also pointed out that competition will continue to ramp up in mobile as well, with Google and Facebook growing by larger percentages and Yahoo’s market share falling from 1.5% to 1.3% this year.
“As Yahoo trims down its legacy business to focus on its so-called MAVENs, we expect the company to shrink in size relative to its competitors,” eMarketer senior forecasting analyst Martín Utreras wrote in the report. “A leaner Yahoo, more focused on its core growing segments, will still face stiff competition in an ever more crowded and sophisticated market.”
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