Yahoo! Inc. (NASDAQ:YHOO), Ad Revenue Market and Corporate Actions

After Alibaba IPO, Yahoo! Inc. (NASDAQ:YHOO) needs to focus on the fundamentals, to ensure investors’ interest in the company. Its stake sale in Alibaba helped it raise $5.1 billion after-tax. The company has significant cash pool and yet it has delivered more than 5% negative returns year-to-date.

The strategies so-far don’t seem to be helping the company boost its ad revenue market share, which declined to 2.5% in 2014 from 3.4% in 2012. While Google Inc. (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT) defended their market share around 31.5% and 2.5%, respectively, between 2012 and 2014. Facebook Inc. (NASDAQ:FB)’s market share grew to 7.8% from 4.1% in 2012.

The Regulatory Concerns

The U.S. federal regulators last year warned 22 search sites including Yahoo! Inc. (NASDAQ:YHOO) to prominently mark out ads in search results. A study by Ben Edelman revealed that ad labeling is more inconsistent making it difficult for users to differentiate between the relevant search results and paid links for their query.

The search companies have done little in response to the federal warning. This is obvious as the search advertising is a major source of their revenues, and non-action is generating more money for Google, Bing, Yahoo and others.

New Head for Ad Sales

In a move full of hope, Yahoo! Inc. (NASDAQ:YHOO) recently appointed Kevin Gentzel as its head of advertising sales for North America. Most recently, Gentzel worked as Chief Revenue Officer at The Washington Post, helping the publisher post its biggest digital advertising revenue last year.

Yahoo! Inc. (NASDAQ:YHOO) has received a proposal to acquire AOL, stating that the move could help it improve digital advertising market share. The Wall Street Journal also recently reported that Yahoo! Inc. (NASDAQ:YHOO) may invest $20 million in Snapchat. With this new appointment and significant resources at hand, Yahoo may consider some of the noteworthy moves to ensure a better return on its investments.

About the Author

Michael joined US Markets Daily in 2009 and is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments.

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