Online firm still struggling to turn mobile strategy into tangible growth, buys analytics firm Flurry to aid the process
While most investors have applauded Mayer's emphatic repositioning of the ageing internet firm around mobility, she can be criticized for a scattergun approach to M&A, snapping up a long list of standalone businesses, often with no significant integration opportunities. That has enriched the content and applications base, and is helping to build a more distinctive user experience, but in the era of big data and personalized ads and content, Yahoo needs to invest more heavily in the analytics which will tie all its purchases together, and help monetize them more effectively.
Flurry, a nine-year old company, started life as an apps developer but then moved into tracking mobile applications in order to support customers' big data and monetization activities. It monitors 500,000 apps and 1.4bn devices a month, and its software is present in an average of seven applications on each of those devices. Its platform is used by 8,000 publishers and 170,000 developers, who are able to gain insights into how their software is being used, and by whom, in order to enhance and monetize it.
This could give Yahoo the kind of analytics to help develop its goal of a streamlined advertising platform with heavy emphasis on personalization, thus tying together some of its other purchases (and enabling it to see which of its various apps are working best).
Interestingly, Mayer has also been talking recently about mobile search, an area where Google and Apple are battling to take the lead in redefining the experience around fine-grained personalization, voice and gesture interaction, and deep contextual awareness. Analytics engines like Flurry's could feed into similar activity at Yahoo, and Mayer recognizes that mobile search needs to be a new experience, and that the firm which captures users' imaginations, as Google did with desktop search, will have huge power in the next generation mobile world. She recently said in a briefing: "We really believe the mobile search experience to be completely different than that of traditional desktop search. There is a clear opportunity here and we are continuing to look at ways to deliver more innovative, more intuitive search experiences on mobile phones."
Financial details of the takeover were not revealed, though reports indicate Flurry went for a nine-figure sum. It has raised about $74m so far in funding and was considered an IPO candidate.
The latest acquisition came just days after Yahoo announced it would buy mobile video start-up RayV, whose technology improves the quality of video streamed to mobile and other online devices.
Since Mayer took over the CEOship nearly two years ago, she has created a new mobile organization and overseen the redesign of most of Yahoo's mobile services, such as Mail and Finance. The aim is to transform the company into a content and applications portal with a heavy focus on streamlining the smartphone web experience.
However, investors' patience is starting to wear thin as the big mobile-first vision fails to translate into quick, tangible impact on the overall business. Yahoo does not break out its mobile revenues, just insisting they are "meaningful", but that indicates that this activity, while strategic, remains a small percentage of the total. The company remains mainly reliant on conventional display advertising, but revenue from that business fell by 7% year-on-year in the second quarter, in results which generally disappointed Wall Street.
Tools like Flurry's may help to speed up progress in delivering results from the mobile strategy. "By joining Yahoo, Flurry will have resources to speed up the delivery of platforms that can help developers build better apps, reach the right users, and explore new revenue opportunities," Scott Burke, Yahoo's advertising technology chief, wrote in a blog post.
Flurry will also help with one of the key objectives set out by Mayer in her keynote address at this year's Consumer Electronics Show. She stressed that Yahoo was in the process of unifying tools to offer advertisers a streamlined and coherent platform, as well as focusing heavily on exclusive content and capabilities for consumers. "A common theme across a lot of what you've seen today is us simplifying our business," Mayer said in her speech. "Simplification has been a guiding force in our approach in reimagining our products, our advertising systems and our future plans."
Her challenge remains a significant one, given Yahoo's lateness in grasping the opportunities of mobile personalization and targeting. Although it has made a string of neat acquisitions - including paying $1bn for Tumblr - the history of the web indicates how difficult it is to differentiate on the basis of content and apps, which are highly susceptible to consumer fashion - there is always a 'next big thing', and Google is better resourced for M&A and product development.
A mobile apps arms race will benefit nobody but the lucky start-ups if the new consumer offerings are not closely tied into an appealing platform for advertisers and other commercial partners, and Google is well ahead in that respect. We can expect Yahoo's mobile shopping spree to continue, but perhaps with more focus on monetization. It has acquired over 30 firms in this process so far, handily listed by TechCrunch (http://techcrunch.com/2014/07/21/yahoo-is-buying-mobile-analytics-firm-flurry-for-north-of-200m/).