Yahoo Shutters SSP and Narrows Focus on Ad Buyers

Yahoo is shutting down its supply-side platform and pivoting its ad-tech business to focus on its demand-side platform, CEO Jim Lanzone told Adweek Thursday. In the process, the company is laying off more than 20% of its total workforce and more than 50% of its ad-tech employees for a total of more than 1,600 people, Axios reported. Lanzone said the decision was a result of a shift in business strategy and not the result of economic hardships roiling the advertising industry. Lanzone took the helm of Yahoo in September 2021, shortly after private equity firm Apollo bought Yahoo from Verizon. “It’s really about narrowing our focus on the piece of ad tech we do best, which is our DSP [and] not spreading our resources too thinly across every part of the stack,” Lanzone said. Yahoo will also refine the scope of its DSP to focus on the premium side of the market, Fortune 500 companies and top agencies instead of the long tail of advertisers, Lanzone said. Ad-Tech Firm EMX, Behind on Publisher Payments, Files for Bankruptcy The decision casts a shadow over the SSP space, which multiple sources said has become increasingly commoditized in recent years, before taking into account recent economic headwinds. This week, SSP EMX filed for bankruptcy; back in January, Magnite laid off 6% of its staff. Reflecting the health of Yahoo's buy side of the business, which reportedly transacts billions in revenue, the number of advertisers spending over $1 million has increased every year for the past three years, per Yahoo chief revenue officer Elizabeth Herbst-Brady. Publisher ad management platform CaféMedia and publisher Daily Mail, who both monetize via Yahoo, said the shuttering of the SSP would not likely cost them significant revenue. They also said they don't plan to partner with another SSP to fill the void of Yahoo’s SSP, though both said the closure came as a surprise, as the product didn’t have any obvious flaws. Yahoo plans to directly integrate some of its SSP publisher clients with its DSP, while other publishers will simply work with other SSPs, a spokesperson said. Yahoo struggles to differentiate its SSP The company, now called Yahoo, had made over 30 ad-tech acquisitions before being acquired by Apollo, Lanzone said (Yahoo itself merged with AOL in 2017). Yahoo struggled to find a way to consolidate all of this tech logically, especially when it came to the SSP, he added. “It was extremely resource intensive and didn’t let any part of the business become exceptional, except for the DSP,” Lanzone said. The current DSP is a result of six different companies and was able to merge seamlessly into one product much faster than the SSP, itself a combination of eight companies, said Herbst-Brady. “The Yahoo SSP had no differentiating point,” said Jeremy Gan, svp of revenue operations and data strategy at Daily Mail, adding that he noticed Yahoo SSP’s user interface had actually improved in the past year. While Yahoo’s SSP didn't compare favorably with competitors, its DSP is on a par with industry leaders, like Google, The Trade Desk and Microsoft-owned Xandr, sources said. We’ll definitely miss them in terms of our bid density.Jeremy Gan, svp of revenue operations and data strategy at Daily Mail A key way SSPs have been differentiating themselves in today’s market is building packages for private marketplace deals in light of industry trends toward supply-path optimization, said Ari Paparo, co-founder of ad-tech firm Beeswax and CEO of ad-tech media company Marketecture. But this requires a robust and expensive client-side staff that is inefficient for smaller SSPs. “[SPO] accrues the benefit to a smaller number of larger SSP,” Paparo said. Yahoo had already been right-sizing its sell-side ad tech. In November, it acquired a 25% stake in content recommendation firm Taboola in an all-equity deal. Yahoo’s internal native advertising product Gemini will shut down, a Yahoo spokesperson said. A strong DSP product in transition Yahoo’s SSP was a place publishers could count on for demand from Yahoo’s DSP, which will be one of the biggest consequences of the SSP’s shuttering, Gan said. However, the effects will likely be short-term as Yahoo redistributes its demand to different SSPs. “We’ll definitely miss them in terms of our bid density,” Gan said. Propelling Yahoo to its position as a top DSP is its ability to leverage its stores of consumer data, said a Yahoo programmatic partner who requested anonymity to discuss industry relationships freely. It’s easier for DSPs to sell audience data to buyers than for SSPs to leverage these assets, the source added. Programmatic Ad Spend Is Getting Less Murky But these strengths were not enough to let Yahoo’s DSP be all things to all clients. Lanzone said Yahoo is pivoting away from long-tail advertisers to avoid “spreading itself too thin.” It’s a major pivot for the company, which has been focused on courting smaller performance advertisers as Meta and Google have successfully done, since former CEO Marissa Meyer’s tenure in the 2010s, a Yahoo spokesperson confirmed to Adweek. “If you are going to cater to the long tail, you have to prove you have the science to drive performance,” the source said. “It’s hard to do that against Google and Facebook.”