Yahoo Buys Mobile Ad Tech, Now What About Reach?

After Yahoo reported flat Q2 revenues (and negative display revenues) yesterday, financial analysts and reporters began asking how the company might generate new revenue growth and where that growth might come from. There are a number of areas potentially.

Search is one, video advertising is another and mobile is yet another. Accordingly, earlier this morning, the company announced it had acquired mobile ad-tech startup AdMovate.

The idea is that AdMovate will help Yahoo deliver more targeted ads on its various mobile apps and mobile Web properties. Here’s how AdMovate described what it does in a post announcing the acquisition:

When we started AdMovate in 2012, we built a product enabling advertisers to create and deliver personalized, hyper-local targeted offers through the mobile channel. We’ve always been passionate about helping marketers engage their consumers at the right time and place through personalized messages.

Yahoo characterized AdMovate’s platform as “sophisticated technology that helps marketers reach their desired audience at the right time and place.” While this is something of a mobile industry cliche (“right ad, right time, right place”) the idea is broadly consistent with the more personalized content and advertising experiences that Marissa Mayer and her team are trying to deliver on Yahoo overall.

Beyond this, Yahoo’s mobile user and engagement metrics are growing. On the Q2 earnings call yesterday Marissa Mayer said the following:

[I]n Q2 we launched the Yahoo! Mail app for tablets, this beautiful magazine like reading experience has contributed to daily active users being up 120% across our mobile mail applications . . .

We also launched our redesigned Yahoo! app for iOS and Android complete with some integration. As a result of this launch we saw a 55% increase in daily active users and a 60% increase in time spent using the application.

As a result of Yahoo’s acquisitions the company has gone from having “dozens” to now “hundreds” of mobile engineers. The AdMovate team is becoming part of the Yahoo display group.

The acquisition may indeed greatly improve Yahoo’s mobile display targeting capabilities. However, it’s my belief that Yahoo will need more acquisitions if it is to see material growth in mobile ad revenue. That may include buying a large mobile-centric property and/or a mobile ad network for greater reach and inventory.

Indeed, Foursquare remains a good fit for Yahoo. But a network or mobile ad exchange would also be a smart acquisition.