Yahoo to lay off 20% of staff as it cuts advertising tech business

Yahoo to lay off 20% of staff as it cuts advertising tech business

Admitting defeat in the online advertising wars, the former search powerhouse is set to lay off 1,600 employees by the end of 2023.

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Yahoo has laid off 1,000 workers, or about 12 per cent of its remaining staff, in a move aimed at restructuring the company’s advertising technology business unit and reallocating its finances more efficiently.

The layoffs, enacted Thursday, mark the end of Yahoo’s attempts to be a direct competitor to Google and Meta in the digital advertising market, according to a report from Axios, which was the first outlet to publicise the job cuts.

A further 600 employees will be let go in the second half of the year, bringing the total to about 20 per cent of Yahoo’s total staff. The layoffs represent a downsizing of roughly 50 per cent of the company’s ad tech division, Axios reported.

Yahoo detailed the strategic reasoning behind the layoffs in a statement released to TechCrunch, saying that the previous ad tech plan, involving a unified stack of demand-side platform, supply-side platform and native businesses, had simply not panned out.

“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 company said.

Yahoo told Axios that it plans to shut down its native advertising platform, Gemini, in favour of relying on a new partnership with ad tech giant Taboola to advertise over its own content and that this would create a substantially larger degree of competition for ad space on Yahoo content.

This isn’t to say that Yahoo is planning to exit the advertising business completely — the company is, as an entity, still profitable, with about US$8 billion in revenue, and some of that can be chalked up to the demand-side part of the ad tech unit.

The DSP business, which Axios said will be renamed Yahoo Advertising, will actually hire more workers, and the company could make acquisitions to help grow that part of the business.

Yahoo representatives were not immediately available for comment.

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