Search marketers can expect changes at Yahoo that influence the look and placement of paid-search ads and content in query listings, as part of several changes that should further improve conversions, profits and site traffic. If CEO Marissa Mayer has it her way, purple will become the hottest color as the company, along with Tumblr, make "the Internet the ultimate creative canvas."
Confirming the trend toward the need for quality content and social media, Yahoo announced plans Monday to acquire micro-blogging platform Tumblr for $1.1 billion. David Karp, Tumblr founder and CEO, will lead the stand-alone company -- which supports more than 100 million users -- at least for the next several years.
Personalization and search technologies will tie Tumblr more tightly into the Yahoo network. Tumblr brings 50 billion blog posts -- about 75 million more arriving each day -- to Yahoo's media and search network. "The two companies will also work together to create advertising opportunities that are seamless and enhance user experience," according to Yahoo CEO Marissa Mayer. The press release issued Monday "promises not to screw it up."
Mayer's decision to buy Tumblr gives Yahoo a credible presence in social media and brings in social-minded developers to build out portal services. While her move to head Yahoo initially sparked reports that the Google engineer would kill off the company's content business and reduce morale by making employees work from the office, employees were also concerned that the company lacked a focus in mobile and social.
J.P. Morgan Analyst Doug Anmuth calls the deal "positive" because it strengthens the company's position in social and mobile with a younger demographic, all areas where Yahoo lags. He explains in a research note that Yahoo ended the first quarter of 2013 with $5.4 billion in cash. Although the company has been focused primarily on smaller deals until now, the investment firm believes Yahoo management needs to take more bold actions like this to strengthen its core business.
The Tumblr acquisition also will bring new life into its search agreement with Microsoft Bing.
Flying under the radar last week admist the Google i/o developers conference, Loki Studios announced the mobile gaming startup would join Yahoo, which also announced a partnership with Twitter to integrate tweets into the company's news feed.