After poor first quarter earnings, Yahoo has announced that it will lay off 5% of the company’s workforce. This will be the third round of layoffs in a little over a year for the Sunnyvale, California-based company. Dan Fost of the Los Angeles Times sheds some light on the challenges the company faces:
Guy Schuller, who oversees media strategy for Chrysler and other clients of interactive ad agency Organic Inc., said that Yahoo’s earnings show how advertisers are putting more emphasis on less-expensive targeted ads, such as search, instead of display ads, “previously their bread and butter.”
“While Yahoo competes in these low-cost, high-return areas, they don’t bring in the same premium dollars as a home-page ad or high-profile sponsorships,” Schuller said in an e-mail.
“Last time I checked, cheaper doesn’t typically drive bottom-line results for large-scale publishers like Yahoo. They will need to continue to adapt in order to challenge the larger ad networks and search engines,” he said.