In order to bring the company the former fame and revenue the newly appointed Yahoo’s Chief Executive Ross Levinsohn is going to focus on digital media.
Almost three weeks ago Yahoo Inc solved its most unsettling conflicts and today it counts on its newly elevated chief executive Ross Levinsohn believing he’ll manage to turn the company into an information and entertainment destination that gives back the advertising dollars passing nowadays by Yahoo Inc.
Earlier Ross Levinsohn worked for such well-known mainstream media companies as Rupert Murdoch’s New Corp and CBS.
People acquainted with Levinsohn’s plans say that he is going to create Yahoo’s own video programming and sign more syndication contracts in chase of advertisements that will be sold at a higher price. So, the company is going to change its orientation from technology to media. It is said that Levinsohn won’t move to Silicon Valley headquarters but stay in the Los Angeles, where he lives now.
One of the Yahoo’s insiders calls Levinsohn a ‘media guy’ and says that with Ross’ elevation it is clear that the main Yahoo’s business model will be base upon sale of display advertising.
Levinsohn was appointed to a post of Yahoo’s Chief Executive on May 13. The same day the company conciliated a dispute with Daniel Loeb. On Monday, Yahoo signed an agreement according to which the company will sell half of its Alibaba Group’s stake back to the Chinese e-commerce giant.
Levinsohn refused to give any comments on the matter but said that more information about his future strategy will be presented in a couple of weeks.
According to the company’s insiders the settlement of two conflicts and Levinsohn’s orientation on advertising enhance Yahoo’s chances for further development and improvement. Under Thompson or Bartz’s reign the company would go around in a circle, they said.
Referring to Yahoo investors and industry executives Levinsohn has several viable alternatives other than to reorient the company around advertising and media.
Jonathan Miller, Chief Digital Officer at News Corp, notes that when you are in a turnaround situation, particularly in an Internet turnaround situation, you have a limited number of ways to solve the riddle. Given that ‘social space’ and ‘search’ already have their leaders, Miller says that the only possible way for Yahoo to get out of the situation is digital media. Furthermore, it can be said Levinsohn is a specialist in this sphere.
David Hallerman, eMarketer analyst, notes that despite generic display advertising has given way to search-based ads, it still returned $12.4 billion in the U.S. industry revenue previous year and is predicted to generate $15.4 billion in 2012.
However, given that advertisers flop to Facebook, Google and others, Yahoo’s share of that has been decreasing. Hallerman predicted that display advertising share of yahoo would lower up to 9.1% in 2012 from 10.8% in 2011.
The situation with video ads is much better. In 2011 they amounted only 6.3% of all U.S. ad revenue but are increasing more than 50% each year.
This determines Levinsohn’s striving to make new deals to display original content from ABC News. Moreover, the newly appointed Yahoo’s CEO is planning to increase the audience at the company’s other content sites.