Yahoo has announced a reduction of 20% of its workforce, which will affect 1,600 employees within its ad tech division. This move is a result of Yahoo’s intention to restructure and strengthen its unprofitable Yahoo for Business advertising unit. The layoffs will be carried out in two phases, with 12% of the company (1,000 employees) to be let go immediately, and another 8% (600 employees) to follow in six months.
According to CEO Jim Lanzone, these changes are not due to economic difficulties, as Yahoo is profitable with approximately $8 billion in yearly revenue. In November, the company took a 25% stake in advertising network Taboola, which is now its native advertising partner in a 30-year commercial agreement. This will allow Yahoo to increase its competition for ad placements eight times over.
To accommodate these changes, Yahoo will shut down its native advertising platforms, including Gemini and its supply-side platform (SSP), and will instead focus on its demand-side platform (DSP), which will be renamed as Yahoo Advertising. This division will concentrate on deals with Fortune 500 companies.
A Yahoo spokesperson stated that despite many years of effort and investment, the company’s strategy of offering a “unified stack” consisting of a demand-side platform (DSP), supply-side platform (SSP), and native platforms was not profitable and failed to meet their high standards.
Yahoo, previously known as Verizon Media Group, was acquired by private equity firm Apollo Global Management for $5 billion in 2021.