Yahoo!’s Homepage Redesign Aimed At Driving User Engagement

by Trefis Team
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Yahoo! (NASDAQ:YHOO) has redesigned its home page in an effort to increase user engagement. This is the first redesign of the company’s home page in over three years and is an attempt to make the user interface simpler and more personalized. We think that this move is a step in the right direction because the firm has been struggling to increase engagement on its sites of late. We won’t know the immediate impact of this move in the next few quarters to come, but it could provide upside to our price estimate if this redesign does in fact increase user engagement.

See our complete analysis of Yahoo! here

Design Specifics

While the redesign doesn’t have too many radical changes in user interface, there is a big emphasis on personalization, a factor that CEO Marissa Mayer has continually stressed on as a key strategy for the company. (See Mayer Will Focus Yahoo On Personalization And Mobile Going Forward)

Staying with tradition, the home page has a news feed which at first lists out generic news content but changes based on the user’s click history and interests. In addition to this automatic personalization feature, the user can specifically remove contents of the front page stream they find unappealing by clicking on an ‘x’ which pops up when they hover over a story.

Overall, we think that these changes have the potential to have an upward impact on Yahoo!’s page views per unique visitor. We currently forecast that page views per unique visitor will decline to 150 by the end of our forecast period, but if this redesign is able to increase user engagement and page views increase to around 190, we would see approximately 5% upside to our price estimate.

Personalization Will Help Drive Ad Revenue

We think that the new personalization features on Yahoo!’s home page could help drive the company’s revenue per page view (RPM). If the new homepage increases user engagement and personalization, the company would be able to leverage the information users provide about their interests to increase ad targeting across its sites. Since advertisers will be willing to pay for more targeted ads, we could see some upside to our RPM estimate.

At present we forecast that RPMs will stay relatively flat over our forecast period at around $1.50. However, if the redesign of Yahoo!’s homepage increases the company’s revenues per page view to $1.80 by the end of our forecast period, we would see 5% upside to our price estimate.

We currently have a $22 price estimate for Yahoo!, which is approximately 5% above the current market price.

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