Yahoo’s Native Ads Generate Impressive Q4 Revenue

Native ads at Yahoo

Native advertising at Yahoo refers to Gemini ads. Native advertising is a type of advertising that’s blended with surrounding content, format, style, and placement. Examples of native advertising are the ads on Facebook’s News Feed and a promoted tweet on Twitter. The News Feed ads and a promoted tweet blend with the content. They don’t interrupt the content’s flow.

Gemini is a platform that combines mobile search and native advertising. It helps advertisers manage and optimize their ads.

Native ads at Yahoo (YHOO) generated revenue of $106 million in 4Q14, up more than 32% quarter-over-quarter. For full year 2014, native ads revenue was nearly $300 million, exceeding company estimates of $250 million.

During the fourth quarter, Yahoo witnessed a strong growth in demand for Gemini-powered ads on PCs and mobile, on Yahoo-owned and operated sites, and on its newly launched publisher offering Yahoo Recommends.

Native ads continued to grow in the fourth quarter and accounted for 43% of total ads sold in Q4. Yahoo’s native ads price per ad grew more than 20% from Q3 to Q4, driven by improved optimizations of ad formats and ad placements.

Yahoo’s Native Ads Generate Impressive Q4 Revenue

Spending on native advertising is increasing

According to a report from Business Insider Intelligence, spending on native ads will reach $8 billion in 2015 and will grow to $21 billion in 2018, rising from $4.7 billion in 2013. Social native ads, which include Facebook (FB) News Feed ads and promoted tweets on Twitter (TWTR), will draw the biggest share of native ad revenue.

Native style display ads, such as ads on Yahoo’s news page and application (or app), will see the fastest growth. Sponsored content such as paid stories and sections on BuzzFeed and the the New York Times will also attract more advertisers.

To gain diversified exposure to Yahoo and Facebook, investors can consider the iShares U.S. Technology ETF (IYW). Yahoo and Facebook together make up 6% of its portfolio. Investors can also consider the Technology Select Sector SPDR ETF (XLK). This ETF has 4.3% of its holdings invested in Facebook.