Yahoo (YHOO) was smart to buy Associated Content.The deal will allow Yahoo to:
- Produce a vast number of owned-and-operated pages cheaply, many (most?) of which can be hosted on a Yahoo sub-domain.
- Sell ads directly on these pages and keep 100% of the revenue (instead of sharing it the way it would have to with an ad-network content partner).
- Improve its SEO relative to Mahalo and dozens of other SEO farms that have been inserting themselves in the search value chain.
- Create pages based on its exclusive knowledge of what people are searching for (the advantages of owning 20% of the search market)
- Own an even greater percentage of the display ad market
- Put more pressure on AOL’s Seed, Demand Media, and others that were preparing to abscond with the online content game.
Yahoo needs growth, not cash, so this is a smart use of ~$100 million. It’s also a business Yahoo (mostly) understands, so the company will be less likely to screw the integration up.