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Marissa Mayer's M&A Strategy, And The Two Companies She Is Closest To Acquiring...

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Nicholas Carlson writes:

Yahoo's business is pretty simple. 

It makes money by selling ads on Web pages.

This is the formula:

Number Of Visits To Web Pages X Rate Yahoo Can Charge For Ads On Those Pages = Revenues

That formula means there are only two ways for CEO Marissa Mayer to grow the business. 

Method One: She can increase the number of visits to Yahoo Web pages. The way Yahoo does that is by creating new popular products and media.

Method Two: She can increase the rate Yahoo charges to put ads on Web pages. The way Yahoo does that is by using ad tech to find out as much as it can about the people looking at its Web pages, and, in "real-time" sell that inventory to buyers willing to pay more to reach certain demographics.

Mayer is going to embrace both methods.

Mayer's favorite thing to work on is consumer-facing products. So she's going to personally invest lots of time in "method one."

As for "method two," Mayer would like to delegate. That's where acquisitions come in.

Because no one from Right Media is still at Yahoo, rumor has it that Yahoo will buy Rubicon or Pubmatic (or both!) to take over Yahoo's ad efforts.

 This method of looking at acquisitions is hilariously interesting. So basically, he's saying Yahoo is a media company and not a tech/product company, even though she is stated as preferring that? 

In this world, Yahoo could never buy: 





RIM (kidding)

and a host of other startups because there's no clear sense of how ads would be able to be displayed, specifically on mobile. 

Also, the entire point of venture model is to use debt/sell equity in order to essentially invest in R&D, at a loss, until tech is useful enough.

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