Yahoo Inc, on Thursday, announced its plan to eliminate 20% of its total workforce, in the first round of cuts in a larger plan to restructure its advertising tech division, amid a wave of layoffs in the industry.
The company, owned by private equity firm - Apollo Global Management Inc, plans to reduce headcount at its ‘Yahoo for Business’ ad tech unit by almost 50% by the end of 2023, which is over 20% of the workforce at Yahoo, a company spokesperson said in a statement shared with DH on email.
The layoffs will start this week with nearly 1,000 employees, the statement added. The company, however, skirted queries on how the layoffs would affect its Indian operations, seeking more time to revert on it.
Yahoo said that the move would enable the company to narrow its focus and investment on its flagship ad business called DSP, or demand-side platform.
“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,” the Yahoo statement elaborated. “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,” it added.
“These changes announced today are entirely within the context of creating a better business plan for that division going forward,” Chief Executive Officer Jim Lanzone said Thursday in an interview. “The company has taken many bites of the apple here in trying to make it work over the years, but as a standalone company we had to take a very honest view in how we apply our resources.”
The move comes after digital advertising providers have had to grapple with skittish customers (advertisers) who pared back their marketing budgets in response to record-high inflation rates and an uncertain economic climate.
Yahoo’s restructuring will create a new division called Yahoo Advertising, which will focus ad sales teams on the company’s properties, including Yahoo Finance, Yahoo News and Yahoo Sports.
In November, Yahoo took an almost 25% stake in advertising network Taboola, which is now the company’s native advertising partner in a 30-year commercial agreement.
The company is “very profitable,” Lanzone said, adding that the job cuts were due more to the division’s restructuring than troubles in the ad market. “We would’ve made these changes even at the peak of the market,” he said.
Yahoo is “still hiring aggressively,” Lanzone said, and employees who lose their jobs will be considered for other roles at the company.