In February 2023, Yahoo announced plans to lay off more than 20% of its staff, impacting over 1,600 employees, as part of a major restructuring of its ad tech unit. This move marks the end of Yahoo's attempt to compete with giants like Google and Meta in the digital advertising industry. In this article, we'll discuss what happened, why it happened, and the potential future impact of these layoffs on Yahoo and its workforce.
Yahoo's decision to lay off a significant portion of its workforce was driven by strategic changes rather than financial challenges. The company aimed to simplify and strengthen profitable parts of the business while sunsetting unprofitable ones, such as its Yahoo for Business advertising unit. Yahoo CEO Jim Lanzone emphasized that the layoffs would greatly benefit the company's overall profitability, allowing for more investment in other profitable areas. The changes were seen as a necessary solution to a longstanding issue within the company.
As part of the restructuring, Yahoo shut down its supply-side platform (SSP) and native advertising platform called Gemini, opting to leverage its partnership with ad tech giant Taboola for native advertising on its own content. The company also focused on growing its demand-side platform (DSP) business, which was renamed Yahoo Advertising. This shift in focus aimed to grow Yahoo's owned and operated properties as lucrative standalone brands, moving away from direct competition with Google and Meta in the digital advertising industry. No information about severance packages for the laid-off employees was mentioned in the sources.
Yahoo's recent layoffs are expected to significantly boost the company's profitability, enabling more focused investments in high-growth areas. In response to these changes, Yahoo is establishing a new division called Yahoo Advertising, which will concentrate on enhancing ad sales for prominent properties like Yahoo Finance, Yahoo News, and Yahoo Sports.
This strategic realignment is intended to create a robust business model for the division. Despite the layoffs, Yahoo is continuing to hire aggressively, demonstrating its commitment to restructuring and positioning itself for future success in the competitive digital marketplace.
The future impact on the Consumer industry may see digital advertising providers facing challenges due to an uncertain economic climate and skittish customers. Yahoo's layoffs and restructuring are a response to these challenges and are part of a larger wave of layoffs in the industry. As Yahoo shifts its focus, the consumer industry might experience changes in the digital advertising landscape, but specific effects of Yahoo's layoffs on the industry remain unclear.
Yahoo's layoffs, affecting over 1,600 employees, were driven by strategic changes to strengthen profitable areas and sunset unprofitable ones. The company shut down its SSP and Gemini platforms, focusing on growing its DSP business and Yahoo Advertising division. These developments could impact the digital advertising landscape and reflect broader challenges in the industry. Yahoo's future moves may involve further restructuring and strategic shifts to maintain competitiveness and profitability in an evolving market.
