Yahoo, Tell Us Again Why We Need You

Last week’s news that Yahoo has acquired mobile advertising and analytics firm Flurry (rumoured to be somewhere between $200 and $300 million) just reinforced the view that the mobile advertising space is the place to be. According to figures from eMarketer, it is set to reach $32.71bn in 2014, up 85% from 2013’s total. That’s a pretty sizeable leap and no doubt Yahoo is keen to achieve a bigger slice of the advertising pie.  Indeed, with Yahoo’s CEO, Marissa Mayer, continually referring to the company as "mobile first," its intentions are quite clear, yet to date, its mobile revenues have done little to support that description. Then again, Yahoo’s revenues in all sectors have been nothing to write home about.

Yahoo historically was unable to successfully extend the capabilities of its display advertising acquisitions to mobile monetization, although to be fair, they were not alone in that. Many of the traditional ad-tech companies failed here. However, Yahoo seemed to get it more wrong than most, and most would agree that they rapidly need to redefine themselves.

Flurry has successfully catered to the mobile analytics market by developing platforms for tracking consumer interactions with mobile applications. We are seeing increasing consolidation in the mobile marketing and analytics space -- App Annie’s acquisition of Distimo and now Yahoo’s acquisition of Flurry. These acquisitions demonstrate that the world of mobile advertising looks to be maturing rapidly and maybe heading toward becoming the dominant ad sector. With the Flurry acquisition, Yahoo has clearly affirmed where it thinks the future of advertising lies. But lest we forget, they have been wrong before. Those who have been around for a while will remember their insistence that they were actually a media company. So can the claims that they now want to be a mobile company be taken seriously?

With Mayer in the hot seat, it certainly seems as though Yahoo is moving its terminally poor display advertising business models over to compete in the more buoyant mobile advertising space. With over 30 acquisitions in mobile in the last few months, it almost seems possible that Yahoo might yet be in a position to compete with Amazon and Google -- but they have a lot of catching up to do.

Amazon is already building its own platform, and the behemoth that is Google being so deeply embedded in mobile, search and advertising technology, it seems unlikely that Yahoo could make significant gains in those areas. It looks to me like they need to take a different angle.

So while Yahoo is frantically trying to gain some ground in mobile, it must be understood that this acquisition will only get them a foot in the door. Specifically, the Flurry acquisition looks to be primarily a data play; Yahoo is essentially acquiring massive amounts of mobile data that will help them develop better ad products and develop vital relationships with app developers.

I think it’s better for the industry all round that Yahoo regain their mojo. In the UK they are so weak as to be an irrelevance. But do we want Google to be so overly dominant? We need the market to keep the pressure on and keep them on their toes

By making this move, and acquiring one of the more advanced companies in mobile world, Yahoo is clearly showing its hand -- the challenge now is to remind us why we need them.

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