Yahoo plans to lay off more than 20% of its total workforce as part of a major restructuring of its ad tech unit, executives told Axios. The cuts will impact more than 50% of Yahoo’s ad tech employees — more than 1,600 people.
Why it matters: The changes will end Yahoo’s years-long effort to compete directly with Google and Meta for digital advertising dominance.
Driving the news: In an interview, Yahoo CEO Jim Lanzone stressed that the layoffs are not attributable to financial challenges, but rather, strategic changes to the company’s Yahoo for Business advertising unit, which is not profitable.
- These changes will be “tremendously beneficial for the profitability of Yahoo overall,” he said, which will allow the company “to go on offense” and invest more in other parts of its business that are profitable.
- Yahoo as a whole is profitable and brings in roughly $8 billion in annual revenue, Axios has reported.
Details: As part of the changes, Yahoo will shut down a part of its advertising business called its SSP, or supply-side platform, which helps digital publishers sell automated ads against their content.
- It will also shut down its native advertising platform, called Gemini, and instead will leverage its newly-formed partnership with ad tech giant Taboola to sell native advertising on its own content instead.
- By moving to Taboola, Yahoo will be able to increase the number of advertisers competing for ad placements on Yahoo properties by 8x, Lanzone said.
- The company is opting to shut down the SSP business instead of selling it, in part because it didn’t want to be locked into a post-sale agreement where it would be forced to use its SSP exclusively, Lanzone said. Working with many different SSPs will help Yahoo optimize its ad revenue.