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Yahoo! Inc. (YHOO): Is Yahoo Becoming A “Daily Habit”?

 August 22, 2013 05:39 PM

In what seems to be a big feather in the cap of CEO Marissa Mayer, Yahoo! Inc. (NASDAQ:YHOO) topped Google, Inc. (NASDAQ:GOOG) to become the most visited Website in the month of July, according to the latest data from comScore.

Yahoo! Sites were seen by 87.2 percent of the 225 million Internet users in July, and that amounts to 196.6 million unique visitors, followed by Google (192.3 million), Microsoft (179.6 million), Facebook (142.3 million) and AOL, Inc. (117.4 million).

Google,Inc. (NASDAQ:GOOG) ranked second with 80.6 percent reach. So this stunning upset could mean higher ad rates and more revenue for Yahoo!.

This is not a mean task for Meyer, who took the helm in July 2012. The most special about the achievement is the data doesn't account the traffic of Yahoo's biggest acquisition this year of Tumblr, which garnered 38.4 million visitors in July.

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The $1.1 billion Tumblr deal was Mayer's bet to bring younger users and a better palette on which marketers can execute earned media and content marketing strategies, by distributing owned media assets that brands and their agencies are creating to be shared by loyalists.

If we include Tumblr, then the number of unique visitors for Yahoo! Sites would be 235.05 million in July while there were only 225 million unique visitors in the survey.

This shows that Yahoo! is experiencing a surge in traffic, which is on the lines of Meyer's goal of making the site a "daily habit" for consumers. The data also suggests that Meyer is on the right track and her site revamp efforts have started to bear fruits.

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However, a mere spike in traffic may not be enough for Yahoo as how the site effectively monetizes traffic is the key to success.

The company's display woes continued in its second quarter as it is able to sell only fewer ads and pricing of display ads remained weak, too. Display revenue for the second quarter fell 10.6 percent to $423 million. Number of ads sold declined 2 percent (sequentially better than the 7 percent drop in the first quarter) and still showing signs that Yahoo is cleaning up some of its inventory issues. The sequential improvement could be the effect of increased engagement as well as traffic growth.

Further, Yahoo! remains relatively weak in multi-screen/mobile and still needs to prove it can generate consistent top-line growth in its display advertising business, particularly as Facebook and Google continue to gain momentum is this area.

Another problem Yahoo faces in the display business is that in which device it would serve those as only a few ads can be displayed on smartphones and tablets – a medium where many people are now accessing Yahoo sites. Yahoo reaches more than 340 million mobile users each month.

Mayer is trying to revive the display business by trying to focus more on mobile devices and acquisitions in that area. In the second quarter alone, Yahoo bought nine companies, including the $1.1 billion acquisition of blogging service Tumblr.

As part of its mobile strategy, Yahoo acquired Qwiki, a New York-based start up that makes mobile app for creating videos on Apple Inc.'s (AAPL) iPhones, and Xobni, which helps people more easily search mobile in-boxes. These acquisitions would help to rival Facebook, Inc. (NASDAQ:FB) and Google, Inc. (NASDAQ:GOOG), who are witnessing stronger advertising growth in mobile and video.

The recent efforts by Mayer suggest that Yahoo is on the right track, and the 70 percent rise in the stock price since Mayer's appointment shows that investors are still betting on her turnaround efforts. Let's hope that the latest comScore data is the beginning of a new upside trend for Yahoo.



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