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Yahoo Believes Adam Cahan Can Resurrect Its Video Business

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Yahoo believes that Adam Cahan can resurrect its video business

In the last part of this series, we discussed Yahoo’s (YHOO) management change for its Tumblr business—despite Tumblr showing excellent growth. A Wall Street Journal report also mentioned that Adam Cahan, who was previously overseeing Yahoo’s mobile division, will now lead the web video group.

Cahan successfully changed Yahoo’s mobile business into a major operation. Yahoo achieved revenue growth of 23% from mobile in 4Q14 on a quarter-over-quarter basis. According to a report from eMarketer, Yahoo’s US mobile ad revenue will account for 3.7% of the country’s mobile ad market in 2015. It will push past Twitter (TWTR) for the first time at 3.6% in 2015.

The company hopes that Cahan can bring about a similar change to its slow-growing video business as well. Yahoo hasn’t experienced the kind of growth that investors expected in the video ad business.

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Despite acquiring BrightRoll, Yahoo will still need premium video content

Yahoo has been focusing on bringing unique premium video content to its users with the help of original series on Yahoo! Screen. Late last year, Yahoo acquired BrightRoll—the industry’s leading programmatic video platform. According to comScore, BrightRoll served more video ads and reached more consumers in 2014 than any other platform.

As the above chart shows, BrightRoll and Specific Media are the top players in the online video ad market. AOL (AOL) and Google (GOOG) rank fourth and fifth. Facebook (FB) acquired the third-ranked player in this market, LiveRail, to leverage the fast-growing video ad market.

However, even though Yahoo acquired BrightRoll, it will still need the premium video content to attract more users to visit its video platform. That’s where Yahoo probably thinks Adam Cahan can make a difference.

Investors can also consider the Technology Select Sector SPDR ETF (XLK). This ETF has 1% of its holdings invested in Yahoo. For the latest updates, visit Market Realist’s Tech, Media, and Telecom page.

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