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Yahoo Plants Own Seed With Associated Content Acquisition

Written on
May 19, 2010 
Author
Gavin Dunaway  |

yahoo_smallADOTAS – When Aol announced its seed Seed program, it was labeled by many industry journalists as “similar to Associated Content.” Reportedly Associated Content was trying to entice Aol last summer with a price tag of $150 million (and strange it couldn’t woo Aol considering CEO Tim Armstrong was an investor in AC), but decided launching its own platform was a better option.

Now Yahoo has acquired Associated Content, which supposedly has been on the auction block for a few years, for a discounted $90 million. Why on Earth would the company do such a thing?!? asks TechCrunch’s Erick Schoenfeld, claiming that curiously anonymous industry execs are puzzled over the move.

Let me be your squeegee: Yahoo wants to be Aol.

Gasp! Why would it ever want to be such a hideous thing! Despite its spinoff from Time Warner and slimming down by ejecting ICQ and Bebo (either through sale or shuttering), Aol’s ad revenue was down 19% in first quarter 2010 due to lower inventory on owned properties, among other things. Aol was cleaning up the clutter and 86ing ad space left and right.

Yahoo, on the other hand, is in a far better position to… Well, be Aol. It brought home $6.5 billion in display revenue last year, more than double that of Microsoft. In the first quarter of 2010, display revenue was up 20% while guaranteed display (ahem, premium) jumped by 24%.

But it’s more than that: Yahoo! wants to be the open social hub that Aol — a perfect example of a failed closed system — never was. Forget Yahoo vs. Google vs. Bing and all the search wars — when Yahoo incorporated Microsoft’s search technology, it was (wisely) forfeiting that game to Google. Hey, Aol’s search is “enhanced” by Google.

Both have email. Both are portals to owned affinity sites as well as partnership niche sites. And Yahoo’s integrations with Facebook and Twitter have enhanced its value as a user-friendly social hub. If 15 years ago America OnLine was the equivalent of “My First Internet Experience,” Yahoo is a far more expansive “Welcome to the Internet!” for contemporary users.

And now Yahoo has planted its own Seed, somewhat ironically purchasing the platform that inspired Aol. In theory, AC is content for the people by the people, with an estimated 380,000 contributors covering 60,000 topics through text, audio, image and video content. According to the Yahoo press release, AC’s editorial staff reviews more than 50,000 pieces a month.

Yahoo’s ad revenue from its premium pages may bring in the majority of the dough, but the AC acquisition mean it wants more long-tail action for balance. Who says you can’t have the best of both worlds? AC could offer midsize and smaller advertisers a wealth of content around which to target more niche users.

Sure there are questions about the quality of Associated Content’s articles and video. Then again I have questions about the quality of Yahoo’s premium content.

A story from the AP featured on Yahoo! News about yesterday’s election results in which incumbent Democratic Senator Arlen Specter of Pennsylvania lost to his primary opponent, Rep. Joe Sestak. Because President Obama endorsed Specter, this means the president’s clout is in jeopardy. Well, a little further analysis (seriously, just beyond the service) would make it obvious that Obama’s endorsement was half-hearted, really just payback for a couple of votes, as he didn’t throw Specter any kind of lifeline when Sestak’s popularity exploded. Specter, who switched parties last year to avoid losing a Republican primary, was seen by many as opportunistic and desperate to hold onto power. His loss would seem to be his own damn fault. (I can’t escape politics! You can take the boy out of DC, but you can’t take the DC out of the boy.)

Geez — on Aol I just saw the headline: “‘Nutty Professor 3′ in the Works?” It took a minute to force my eyes to roll forward.

For those not capable of reading between the lines, quality is subjective. Schoenfeld cites an article about ecologically friendly sex toys (you might not want to click on that at work) as an example of questionable content; I happen to know several people concerned about the environment and sexually curious who would be interested in that article. I actually forwarded it, as it makes a nice companion piece to Isabella Rossellini’s “Green Porno” (another one you may not want to view in the office) series, a hilarious, sensual and ultimately informative examination of various creatures’ sex lives through costumes and puppetry.

Most content has an audience, so a plethora of content in various affinities will reach more audiences — and attract more advertisers. Diverse advertisers. Yahoo CEO Carol Bartz knows what I’m talkin’ ’bout:

“Together, we’ll create more content around what we know our users care about, and open up new and creative avenues for advertisers to engage with consumers across our network. These are important aspects of building engaging consumer experiences on Yahoo!, and one of the reasons why we’re one of the most visited destinations online.”

Talking to ClickZ, Yahoo Vice President and Pitaro mentioned that Yahoo is going to add its own search, click-through and buzz data to the AC platform. While it expands the U.S.-only AC to the global level, it will work content around Yahoo’s premium crop rather than build affinity sites.

“We’re not going to build out 85 different sites within Yahoo,” he said. “This is about taking this niche content and using it to complement and round out our existing properties.”

So is there such a thing as too much content? Considering that Yahoo’s  been pretty good at managing content, I’d say no, not in this case.

But where does the RightMedia Exchange fit in all this? Last year Yahoo rebranded it as a premium exchange, shutting down the direct market exchange, and more recently veteran VP Bill Wise announced his departure — so how will the exchange work with the wealth of long-tail that Yahoo! is about to inherit?





Gavin Dunaway is Editor, U.S. at AdMonsters, a leading trade publication, event producer and service provider for the online advertising industry. Previously, he had been Senior Editor of Adotas, where he arrived after years of ping-ponging around various industry publications. This Washington, D.C. native and George Mason University graduate also enjoys playing electric guitar so loud that the walls shake.

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