Yahoo places its bet on Mavens as it cuts down workforce

Search giant Yahoo will be cutting 15% of its workforce as it looks to reduce operating expenses by more than US$400 million by the end of 2016. To that end, Yahoo plans to also exit five offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan.

It’s expected that most of these changes will take place in Q1, but by the end of 2016, the company anticipates having approximately 9,000 employees and fewer than 1,000 contractors. This represents a workforce that is roughly 42%.

This was announced by Marissa Mayer (pictured), CEO of Yahoo as she outlined the company’s plans of improving its consumer and advertiser product quality and grow daily active users (DAUs). Mayer said the strategic plan is to help accelerate Yahoo’s transformation and this calls “for bold shifts in products and in resources.”

Going forward, Yahoo will also continue to drive growth in revenue realized through Mavens (mobile, video, native and social) to US$1.8 billion this year. Advertiser spends in Mavens areas are projected to increase significantly, said the company in its financial statement. Mavens will also be a mean to counterbalance legacy business declines with an emphasis on mobile. Mavens revenue exceeded $1.6 billion in GAAP revenue in 2015, a 45% Y-o-Y increase that surpassed its forecast.

The company will put more focus on its engagement growth and improved monetisation for the core consumer products, together with the syndication of mobile tools through the Yahoo Mobile Developer Suite. For Yahoo’s search business, mobile search is the biggest opportunity. The Company will shift most of the resources in this area toward more forward-leaning mobile search investments, positioning it to redefine search for mobile devices, which will help drive sustainable long-term growth and differentiation.

According to Yahoo, mobile industry ad spend is anticipated to nearly double by 2018, and programmatic technology has become the proven advertising solution for optimal performance, pricing and control. In response to these trends, Yahoo’s global sales team has already begun to shift toward performance and programmatic offerings.

For consumer products, Yahoo will consist of three global platforms: Search, Mail, and Tumblr, and four verticals: News, Sports, Finance and Lifestyle in growth markets such as the US., Canada, U.K., Germany, Hong Kong, and Taiwan. For advertisers, Yahoo will be defined by two core offerings: Gemini and BrightRoll. Gemini combines search and native ads for superior results, while BrightRoll offers programmatic buying and selling tools for video, display and native advertising.

This strategy, plus the work that’s been done over the last two years with Mavens-focused ad formats and investment in Gemini and BrightRoll platforms, is positioned to help Yahoo ride these trends toward sustainable growth.

“We are extremely proud of the billion dollar plus business we have built in mobile, video, native, and social. Our strategic bets in Mavens have enabled us build an entirely new, forward-leaning business of tremendous scale and growth in just three years,” Mayer said.

“The plan announced builds from that achievement and will dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners.”

Maynard Webb, Yahoo’s Chairman of the Board also added that the Board also believes that exploring additional strategic alternatives, in parallel to the execution of the management plan.

“Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximization. In addition to continuing work on the reverse spin, which we’ve discussed previously, we will engage on qualified strategic proposals,” Webb said.

In 2005 Yahoo had invested $1 Billion into Alibaba but seven years later sold part of it back to Alibaba for $7.6 billion. Currently Yahoo's remaining stake in Alibaba is now worth around $25 billion.