Yahoo unveils path to mobile-first future

In its transition to becoming a mobile-first company, Yahoo is undergoing some significant changes, led by an aggressive strategy of acquisitions for talent and technology.

Today the company boasts some 450 million monthly active users, growth of more than 100% in just two years. But more significantly is that 50% of that monthly traffic now comes from mobile, a yearly increase of three times.

Yahoo data shows time spent on mobile grew 79% in the past year alone and advertising dollars are now starting to follow.

The company reported that Q3 mobile revenues hit $200 million, with mobile revenue for the full year expected to be in excess of $1.2 billion.

“We have invested deeply in mobile and we are seeing those investments pay off,” said Yahoo CEO Marissa Mayer.

“Not only are our mobile products attracting praise and engagement from users and industry awards, they are generating meaningful revenue for Yahoo.”

It’s a statistic Yahoo executives are keen to share, but the shift to mobile is far from complete.

While the company’s biggest rivals, including Facebook and Google, moved early on the mobile space, Adam Cahan, senior vice-president of mobile and emerging products at Yahoo, is confident it will claw back share.

“There is five times more growth ahead of us,” he said. “We are at the beginning of this mobile revolution and that is what makes it exciting.”

Two years ago Cahan joined Yahoo with a team of about 50 mobile engineers. Today its mobile unit has grown to more than 550.

“We continue to scale and grow because of the products we have brought to market.”

He says on average people check their smartphones 150 times a day and spend more time on mobile devices than any other traditional and online media put together.

The future is native ads

This heavy mobile push is one reason why Yahoo is betting that native advertising, built around highly personal content, will drive its mobile revenue forward.

“We are trying to change the way consumers interact with their devices,” Cahan said. “People are always connected now.”

Yahoo is also looking for new ways to work with publishing partners through products such as Yahoo Recommends, which brings content personalisation technology and native ads to publishers across the web.

“The shift to native advertising has been a big win for the industry,” says Zachary John, vice-president of monetisation and business operations for mobile and emerging products, at Yahoo.

“Native on mobile is the way forward, it makes users feel that ads are better.”

Culture shift

Under chief executive Mayer, the Yahoo culture has been in a revival of sorts. In February last year she ended a long-held practice of allowing employees to work from home, arguing that speed and quality were sacrificed when employees were not at their desks.

In the three days we spent at Yahoo Sunnyvale HQ, there was a widespread belief that energy and buzz had returned to its campus.

A weekly meeting called Friday FYI allows anyone to post questions to Yahoo executives, including Mayer, on a range of topics.

Fernando Delgado, senior director of product management at Yahoo, admitted that prior to Mayer’s appointment there was a morale problem and a loss of excitement.

“The company had been through a lot,” he said.

He highlighted Friday, a day where many employees worked from home, as one example where the shift had happened.

“The campus was empty. Now on Friday it’s a struggle to find a parking space. That was unthinkable before she joined.”

He added that a culture of collaboration, particularly with the teams of its acquisitions such as Flurry, Summly, Tumblr, IntoNow and Citizen Sports, has been allowed to grow.

 
Yahoo staff taking time for a game of beach volleyball.

Since Mayer joined Yahoo in July 2012, the company has spent just over $1.6 billion on acquisitions, and speaking to the media, the company hinted this strategy would continue.

“Acquisitions globally are something we are doing,” said Aaron Crum, vice-president of corporate developments, adding that Asia was in its targets.

He cites the acquisition of Summly, a summarisation technology, as an example of how buying talent and technology is working.

“Summly was a huge success for us. It was a very small team, but they brought some important technology into the company and as we make the transition to mobile, Summly technology will be very important.”

Mark Daiss and William Choi from the Aviate team. Technology from the Aviate acquisition has been widely used across Yahoo’s products.

With mobile now growing at a healthy rate, executives say it won’t be long before mobile traffic surpasses its desktop traffic. But for John, there are two clear challenges ahead – having the right products and the right advertising solutions.

“This is the shift that is going on. We’re seeing it across our entire ecosystem and it’s why we are investing so much.”