Yahoo announced on Thursday that as part of a significant restructuring of its ad tech group, it planned to layoff more than 20% of its whole employees. By the end of the year, the cuts will affect over 50% of Yahoo's ad tech staff, including nearly 1,000 workers this week, the company claimed.
This comes at a time when many advertisers have reduced their marketing budgets in reaction to all-time high inflation rates and ongoing recessionary uncertainties. On Thursday, the workforce received notice that 1,000 employees, or 12% of the company, would lose their jobs that day. Another 8%, or 600 individuals, will be let go in six months. Approximately half of Yahoo's ad tech division will be affected by these cuts.
According to Yahoo CEO Jim Lanzone in an interview with Axios, these layoffs are not the result of financial difficulties but rather deliberate decisions to bolster the underperforming Yahoo for Business advertising division. Yahoo makes money overall, bringing in about $8 billion a year.
Numerous American businesses, including Goldman Sachs Group Inc. and Alphabet Inc., have also made thousands of layoffs this year to weather a decline in demand brought on by high inflation and rising interest rates.
Yahoo, which has been owned by private equity firm Apollo Global Management since a $5 billion takeover in 2021, the decision would allow the company to concentrate its efforts and investments on its DSP, demand-side platform, or primary ad business.
In a 30-year commercial agreement, Yahoo acquired nearly 25% ownership in the ad network Taboola in November. Taboola is now the company's native advertising partner. According to Lanzone, these adjustments will enable Yahoo to enhance competition for ad spots by eight times.
However, as a result of the shift, Yahoo will discontinue supply-side platforms for native advertising, such as Gemini (SSP). Yahoo's demand-side platform (DSP), which will now be called Yahoo Advertising, will also receive attention. Deals with Fortune 500 firms will be the main focus of this branch.
"Over several years, the strategy of our ads business was to compete in the ad tech industry by offering a 'unified stack' consisting of our Demand Side Platform (DSP), Supply Side Platform (SSP), and Native platforms," a Yahoo spokesperson said. "Despite many years of effort and investment, this strategy was not profitable and struggled to live up to our high standards across the entire stack."
The news of the layoffs at Yahoo was originally reported by Axios.
