The reinvention and reinvigoration of Yahoo under Marissa Mayer continues apace.
Strange to think that just a couple of years ago, Yahoo was regarded by tech analysts as a bit of a basket case, an old-school legacy internet business that had lost its way and which nobody quite knew what it was for.
It relied on offerings like email, its directory, web hosting services such as Geocities and its web portals, and by the 2010s everyone knew that those kind of services weren’t going to secure you a future, or get anyone excited. The tech world (and investors) had moved on, and Apple, Google, Amazon, Twitter and Facebook were the businesses everyone was talking about.
A run of poor decisions – founder Jerry Yang rebuffing a once-in-a-lifetime buyout offer from Microsoft, and some ill-judged senior appointments chief among them – only added to the perception that this was a business going nowhere fast. Yahoo was barely anywhere to be seen on mobile devices, and was largely absent from social media.
Then, almost two years to the day, along came young, dynamic new CEO Marissa Mayer (an ex-Googler) and the business started to turn itself around. Old services were dropped or sold off, internal bureaucracy slashed and a run of acquisitions – almost 40 to date, by my count – began.
One of the first things Mayer did was to start leveraging Flickr, its neglected, under-used but much-loved photo-sharing service. By the end of 2012 a superb mobile version was launched, followed in May 2013 by a (controversial, it has to be said, particularly with Flickr’s huge and very devoted user base) revamp of the main Flickr site.
Almost immediately after Mayer took over the helm, the acquisitions also began, firstly with Stamped, a product that lets consumers share favourite restaurants and music on their smartphones, and then most spectacularly with micro-blogging site Tumblr ($1.1bn). This caught everyone on the hop, and proved that the old giant could still surprise people. More importantly, it provided Yahoo with a much-needed social media platform to reach a younger generation of users and breathe new life into its ailing brand.
Since then Yahoo’s acquisitions have focussed on the big growth areas – sharing, news, short-form video, gaming and content curation, with firms such as OnTheAir (video sharing); Snip.it, a Pinterest-like service that allows news consumers to clip, organise and share articles; Jybe, a mobile app that recommends movies, books and restaurants based on data contained in social networks; the mobile news aggregator Summly; flight search app MileWise; gaming software infrastructure developer PlayerScale; app developer BigNoggins; video creation app Qwiki; social web boswer Rock Melt; online platform service for live concerts, Evntlive; Quik.io, a cross-platform video streaming app; Cloud Party, a browser-based game creation engine; Incredible Labs, the startup behind mobile personal assistant app, Donna; Yahoo acquired the social journaling app Wander; and Vizify, a startup that specialises in creating interactive infographics and videos of users' social media data.
All of these point to a company reinventing itself for a more mobile world – indeed, just a couple of weeks ago it announced that it had 450 million monthly active users and that search and display mobile ad revenues had grown 100 per cent over the past year. Interestingly, it also reported that its profits fell by 18 per cent to $270m during the three months to the end of June, and that revenues also fell 3 per cent to $1.08bn.
Most of the decline, Mayer said, was due to a sharp drop in digital display advertising, which plunged 8 per cent in the second quarter – hence the reason why that doubling of mobile revenues is the big story.
According to a recent report by online analyst eMarketer, the global mobile ad market is expected to reach $32.7bn (£19.1bn) this year, up 84.7 per cent from $17.7bn (£10.4bn) in 2013, of which Google and Facebook accounted for more than two-thirds. Indeed, on Tuesday this week (22nd June) Facebook announced a 138 per cent rise in net income for the second quarter to $791m (£464m).
Revenue from advertising, which makes up most of Facebook's income, was $2.68bn, up 67 per cent compared with the second quarter of 2013 – and ads on mobile devices accounted for 62 per cent of this.
Yahoo, which was very late to this particular party, has been playing catch-up, but is showing a new determination to be a player that may have the guys over at Mountain View and Menlo Park, if not actually worried just yet, at least aware of the sleeping giant in Sunnyvale upping its game at long last.
Mayer’s ambition to make Yahoo “a mobile first company” looks like coming to fruition. And it came even closer this week with the news that it had acquired app analytics company Flurry for an estimated $300m (£175m).
Flurry was set up in 2005 in San Francisco. It offers app developers the data to develop “a more tailored experience for users, including personalised ads”.
According to Yahoo, 170,000 developers use Flurry’s analytics and it views app activity from 1.4 billion devices each month. That is seriously Big Data, and it gives credence to the rumours that Amazon was sniffing round Flurry earlier this year – plenty of firms would kill to get their hands on that kind of analytics power.
The move is believed to represent Yahoo’s biggest acquisition since it bought Tumblr in 2012. It follows last week’s second quarter presentation, in which Yahoo CEO Marissa Mayer reported an 18 per cent year-on-year decline in profits.
Scott Burke, SVP advertising technology at Yahoo, said in a statement: "Flurry’s success is the result of years of committed investment by a passionate team to create an indispensable platform for mobile developers.
“We want to harness our collective innovative spirit and bolster the mobile ecosystem by providing developers the analytics and monetisation solutions to drive their success."
Simon Khalaf, Flurry CEO and president, said: "As part of Yahoo, we will have access to more resources to speed up the delivery of great products that can help app developers build better apps, reach the right users, and explore new revenue opportunities."
All in all, then another canny move by a very smart lady – and one that would appear to be beneficial to all concerned.
It’ll be fascinating to see where Yahoo is in a year, or five years’ time. I don’t think anyone could have predicted the events of the past couple of years…
Barry Dudley is a partner at Green Square, corporate finance advisors to the media and marketing sector