Download pdf - Business Analytics Capstone

Business Analytics Capstone Framework for Strategy

Corey Anderson

5-13-2016

https://www.linkedin.com/in/coreyanderson11

Problem Statement


Problem Statement–Describe the Problem Adblockers present to Yahoo!

AdBlockers pose significant risk for companies like Yahoo! that rely heavily on digital advertising as a main source of revenue. AdBlockers can simultaneously limit (or eliminate) consumer exposure to what could be very beneficial products and/or services.

There are multiple advertising platforms to consider (where ads might be blocked), as research by Adobe and PageFair indicates desktop-based browsers using some form of adblocking grew from 21 million a month in 2010 to 181 million per month in 2015. *Note this does not take into account the trend towards increased consumer adoption of mobile devices.

The type of web browser used by consumers is also of great importance related to generating advertising revenue, as adblocking extensions become available and are enabled by the user.


In dealing with the rising popularity of adblocking, Yahoo! has to consider changes in behavior, as consumers continue to show indications that, while not moving away from their desktop completely, research indicates 48% start a search for a product or service on a mobile device. Research also indicates that consumers are now spending more time on their mobile devices, averaging about 3 hours per day.

Problem Statement (continued)–Describe the Problem Adblockers present to Yahoo!



The rise of adblocking adoption trends towards key advertising demos, especially with 18-34 year olds and clearly with the same demographics moving towards smartphones, adblocking creates significant risk for lost revenue.

Including the key 18-34 year old demographic, estimates indicate 68% of American own a smartphone, of which a 2016 comScore report indicates Apple’s market share is at 43.9 percent. With the September 2015 release of Apple’s iOS 9 update (which allows adblocking by default in the Safari browser) Yahoo! now faces another hurdle to generating advertising revenue from consumers on mobile devices.




Additional consumer behavior indicates traditional desktop web browsers have declined in popularity, along with browsers on mobile devices, and consumers are instead spending more time inside their favorite apps.

With these statistics in mind, Yahoo! is in a position of strength with over 600 million monthly users of native mobile apps, including Yahoo! Finance (estimated at 42.1 million monthly unique mobile visitors in the U.S.), Yahoo! Mail (81 million users U.S. users, of 273 million globally) and others.

However, data indicates competitive apps like Facebook are used more frequently on mobile devices and are reporting that mobile advertising makes up 80% of their total ad revenue, over and above revenue figures generated by Yahoo!



These factors all add up to significant risk of lost advertising revenue for Yahoo!, as indicated in research that demonstrated that adblocking cost the digital advertising industry $21.8 billion in 2015. Projections into 2016 call for an alarming $41.4 billion in lost advertising revenue.

*Yahoo! currently reports only a 1.8% share of the global mobile digital advertising market. eMarketer estimates global mobile ad spending will increase to $198.81 billion by 2019, so this is a key area that needs improvement and adblocking only increases that challenge.


Strategy


Strategy for

• To combat these factors, Yahoo! needs to implement a visionary strategy, one with ambidexterity that deploys multiple approaches to solving the problem that adblocking software presents on both desktop and mobile devices.

• Previously cited research clearly indicates that the trend is obviously towards adblocking on desktop and mobile, therefore, Yahoo! must quickly pivot to further monetize these channels and live within this new adblocking reality.

• Yahoo! can succeed by improving user experience for their 600M mobile app users and continued investment and innovation with the Gemini mobile advertising platform is inline with the company’s 2016 strategy.

• Research should be conducted to uncover opportunities for advanced targeting methods to reach consumers with unobtrusive, which can be completed through bold and persistent experimentation.

• Yahoo! will also need to work with advertising partners to help them understand that they need to stay away from building creative advertisements which require massive amounts of data and bandwidth (that take a long time to load, in more simple terms) before they serve the consumer. Less is more.

• A final recommendation would be for Yahoo! to focus on the things they can control and work with their advertising partners to create unique content that would draw R.A.V.E.S. reviews. The content would have to be relevant and respectful, actionable, valuable and value-generating, with an exceptional user experience and make for a share-worthy story.


Effects and Measurement


Effects and Measurement for Describe the anticipated effects of your strategy and how you will measure them

Strategic Next Steps for Yahoo! to Consider (control what you can control):• Increase awareness about what Adblockers do and don’t do for advertisers and consumers. • Offer free Yahoo webinars to help content creators understand how to best limit large data-consuming creatives.

• Continue offering desktop and search advertising, but shift focus to mobile advertising solutions through native apps.• Continued improvements in UX via Yahoo! apps like Yahoo! Mail and Yahoo! Finance as consumers now spend 7x more

time on apps than on mobile web browsers.

• Yahoo! needs to reduce average quarterly Traffic Acquisition Costs (TAC), which was an average of $116.5 million per quarter for search and $102 million per quarter for display in 2015.

• Reductions in TAC can be realized through native advertising, which would reduce expense of 3rd party traffic referrals.


Effects and Measurement for Describe the anticipated effects of your strategy and how you will measure them

• Move to more contextual and consensual forms of advertising while experimenting with ways to gain and measure more insightful user data to improve targeting on the Gemini mobile advertising platform.

• Increase investment in mobile R&D, as there are currently 600 million active monthly users of Yahoo! mobile products and smartphone adoption rates continue to climb, as eMarketer estimates there will be 2.7 billion smartphone users by 2018, while Forbes projects up to 6 billion users by 2020.

• Research currently indicates 0.1% of mobile pageviews are affected by Adblockers in the US, UK and the Netherlands, while rates are much higher in China and India at 7.9% and 9.0%, respectively so anticipate US, UK rates to climb to those levels over time.

• Yahoo! announced other strategic plans in Q1 of 2016, which align with many of the suggestions made in this presentation.
