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Marissa Mayer tactic pays off as Yahoo's advertising is set to overtake Twitter on mobile

Marissa Mayer’s turnaround effort at Yahoo looks as if it is about to pay off with the company set to surpass Twitter next year to become the third-biggest company in US mobile advertising.

According to Bloomberg, it all started with a meeting the new CEO held in early 2013 at Yahoo’s HQ in Sunnyvale, California where she challenged a team of employees to create a new ad feature that would run across mobile devices and desktop personal computers - and gave them 45 days to complete it.

The group, called “Moneyball” responded by delivering the new service in 43 days. The technology laid the groundwork for the effort that is helping to drive Yahoo’s growth in digital promotions on smartphones and tablets.

“We’ve invested deeply in mobile, and those investments are paying off,” Mayer said on a recent call with analysts .

Yahoo is now projected to be the largest gainer of US mobile-ad market share between 2014 and 2016, according to new data from EMarketer out yesterday.

Yahoo’s mobile ads will climb to 3.74 per cent in 2015 and to 4.2 per cent in 2016, while still tiny, it’s enough to take Yahoo ahead of current number three player Twitter, which will have 3.69 per cent market share next year and 3.8 per cent in 2016.

Google and Facebook will remain the biggest US mobile-ad companies, with 35 per cent and 17 per cent shares next year respectively.

Bloomberg said the numbers show how an effort by Mayer to marshal resources and refocus the company on mobile is starting to pay off.

It makes Yahoo relevant in a digital-advertising area that’s projected to reach almost $60bn in the U.S. in 2018 from $19bn this year.

In October, Mayer broke out Yahoo’s mobile revenue for the first time, reporting third-quarter sales of more than $200m, with gross revenue in mobile set to exceed $1.2bn this year.

“Mobile is becoming extremely mainstream” for Yahoo, said Sameet Sinha, an analyst at B. Riley & Co., who rates the stock a buy. “That sort of focus over the last two years seems to be working for them now.”

When Mayer arrived at Yahoo in July 2012, the company had only 50 or 60 employees- less than 1 per cent of its total workforce then -- devoted to technology for smartphones and tablets.

Adam Cahan, who formerly worked at Google on mobile initiatives and had joined Yahoo several months before Mayer, was soon asked to head up the effort to centralise and expand mobile, said Bloomberg.

“Marissa came and said, hey, ‘It’s quite clear that there’s a massive platform shift under way. We’re moving to a mobile growth opportunity,’”

Cahan said in an interview that he quickly began adding people to the mobile and emerging products team, which today numbers almost 600 workers.