Yahoo turns to partnerships to boost popularity

Yahoo plans to abandon high-profile purchases, such as that of Flickr, in favour of partnering with content and service providers.

The company will concentrate on partnering with companies, such as Zynga and Nokia, in a bid to boost its popularity among consumers and boost ad revenues.

Molly Spilman, Yahoo’s global senior VP of B2B, says the company will pursue partnerships over acquisitions despite its sizeable cash reserve.

While Google has made moves to own the display space by offering end-to-end technological tools, Yahoo looks to be building a more rounded display proposition for brands as a way to entice them out of their traditional dependence on search.

Its network’s recent rebranding as Yahoo Network Plus, incorporating the retargeting capabilities of Dapper, gives it an even greater reach but at a more efficient granular level.

By seeking out content partnerships in social, video, local and hyperlocal contexts, Yahoo can offer brands a media proposition that goes beyond standard performance display, and for display that’s a welcome development.

Spilman adds: “We’re always on the lookout for what we think are marquee acquisitions. But things are moving so fast that by the time you get through any due diligence, the next thing has come along.”

Reports had suggested that Yahoo would attempt to improve its services with the purchase of location-based gaming service Foursquare, among others, earlier in the year. But this speculation gave way to reports that Yahoo itself might be subject to a takeover bid by private equity groups and web giants such as AOL and News Corp.

The strategy change follows Yahoo’s purchase of online display advertising and retargeting company Dapper for a reputed $55m.

Spilman says that buying Dapper was a bid to improve Yahoo’s attractiveness to media planners because it will enhance its real-time bidding and retargeting capabilities.

“On the B2B side, there’s more of a willingness to make important purchases, but on the consumer side it’s tough,” she adds.

Yahoo is also conducting research into online video consumption in a bid to increase brands’ willingness to invest in the channel. It published research last week which found that video is a big decider for film fans, with 50% of respondents watching trailers online.

Spilman says Yahoo was conducting qualitative research to distinguish its properties from those of competitors that can provide larger scale. “We conducted research in the US that looked at the best form of advertising to choose on a specific platform,” she said. “We’re looking at the mindset that users are in when they’re on a platform, so we can help brands target by mindset.”

She adds that it was trying to position itself as an online solutions company that can help brands reach consumers online. “There’s a misconception that Yahoo is just about scale. Our message is that we offer more than that,” she said.

Media agencies suggested that Yahoo’s more judicious acquisition strategy was to prevent replicating previous purchases that have proven difficult to commercialise.

James Briscoe, MD of Unique Digital, says: “Yahoo has acquired good properties but found them difficult to monetise, so it’s inevitable for it to go down this route.”

Justin Taylor, managing partner at MEC Interaction, says: “Yahoo is finding its place in the market. What it needs to do is give us the tools and research to show it’s worthwhile.”

Vincent LeTang, lead advertising analyst at Screen Digest, says Yahoo’s increased focus on research studies would help buoy its ad revenues and distinguish it from Google.

“Yahoo has no other choice than to make itself more appealing in the display market,” he says. “In search it’s a distant second and more services, such as video, can help it drive-up CPM and CPC rates.”

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