Smart Move By Yahoo (Buying Associated Content)

Take that, AOL!

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.

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