• by Mark Walsh  @markfwal, July 14, 2014

Two years into her tenure as Yahoo CEO, Marissa Mayer is still very much in the midst of a turnaround of the Web giant. For all the changes made under her leadership—from dozens of startup acquisitions to revamped Web properties to new ad formats—revenue growth has remained largely flat.

With Yahoo reporting second-quarter earnings Tuesday, one question is whether the company can build on the small signs of improvement in the first quarter, when it posted a 1% increased in net revenue growth after four quarters of no growth. Display revenue, excluding traffic costs, also rose 2%, after falling in recent quarters.

Wall Street analysts, on average, expect Yahoo’s second-quarter revenue to come in at $1.08 billion, slightly below the $1.13 billion from the prior quarter, and Yahoo’s own projected range of $1.12 to $1.16 billion. Analysts forecast a profit of 38 cents a share.

Continuing to buoy Yahoo’s stock is its investment in Alibaba, in which it holds a 24% stake. The China-based e-commerce giant is expected to go public in the next couple of months, and Yahoo will sell 40% of its holding in the IPO. But once the offering is completed, analysts will increasingly switch their focus back to Yahoo’s core business.

Mayer has defined mobile, social, video and native advertising as the company’s four growth areas on the display side. In that vein, Yahoo has continued its torrid pace of acquisitions in the first half of the year, picking up 11 mostly mobile or social startups to bolster its talent and technology internally.

Cash generated by the Alibaba IPO could fuel larger-scale acquisitions rather than “acqui-hires,” according to Brian Wieser, senior analyst at Pivotal Research Group.

A late night meeting between Mayer and AOL CEO Tim Armstrong at Allen & Co.'s Sun Valley conference last week sparked speculation of a Web portal merger. But Re/Code’s Kara Swisher reported Mayer thinks the deal wouldn't sense for Yahoo, citing unnamed sources.

Yahoo has been busy inside as well, continuing to roll out new or overhauled content offerings, including glossy digital magazines like Yahoo Beauty and Yahoo Travel and its New Fronts announcement of a pair original half-hour comedies slated to debut next year. Last week, it also ordered new episodes of cancelled NBC series "Community" as it pushes further into TV-style programming.

In tandem with expanded content, Yahoo has introduced more ad options, including a new native format for mobile, GIF-like rich media Motion Ads, and the extension of sponsored posts on Tumblr to Yahoo proper. Helping to power adoption of new ad formats is the company’s Gemini marketplace for buying mobile search and native ads.

Agency executives, for the most part, applaud Mayer’s efforts to rejuvenate Yahoo with enhanced content and new native ad units. Jonathan Adams, SVP, media, North America, at iCrossing, for example, noted the firm has seen higher engagement and performance from ad spending with Yahoo in the last year.

“While our paid search investments are significant, these increases have primarily come across display, video and mobile,” he said. But the changes so far haven’t delivered a corresponding boost in ad revenue across the categories where Yahoo wants to grow.

“Yahoo’s initiatives with TV-grade video content are positives in this area, but much more is required than has been announced so far,” wrote Pivotal’s Wieser in an earnings preview. “Further, Yahoo’s mobile offering remains under-developed (meaning it is unable to capture much in the way of the app install revenues driving so much of digital advertising’s growth). Monetization on Tumblr seems mostly elusive as well, so far.”

While Yahoo has touted the growth of its mobile audience to more than 450 million monthly users, it has stated in securities filings that its mobile revenue isn’t "material"--or large enough to report.  Angela Steele, CEO of IPG-owned mobile agency Ansible suggested it’s still too early for mobile initiatives like its updates apps and native ad formats to translate into higher revenue for Yahoo.

But once Facebook extended in-stream ads to mobile, it certainly didn’t take long for the company to start reaping the rewards of that step. Almost 60% of its ad revenue now comes on the mobile side. Yahoo would do well to show just a fraction of that proportion as a sign its starting to monetize its growing mobile traffic.