Yahoo has acquired content factory Associated Content. In its quest for display ad dominance, Yahoo has long competed with AOL, but the deal puts the firms in more direct competition than ever. Yahoo reportedly paid $100 million for Associated Content.
AC has around 350,000 contributors who create content based on algorithms that determine which content topics are in high demand - and therefore which content will generate the most value to publishers selling ads around it. AOL's own Seed content division also commissions work from contributors based on what its data tells it is of most interest to readers.
Yahoo expects to use AC to help it build up content inventory related to topics that audiences and advertisers will be most interested in. Yahoo also plans to partner with publishers "who can help the company shape the tremendous variety of content coming in," said the firm in a press release about the acquisition. Yahoo also said it plans to employ the AC system on a global basis.
AC execs will report to David Ko, Yahoo's head of audience and mobile, and staff will remain in AC's Denver and New York offices, according to James Pitaro, VP and head of media at Yahoo. "We intend to keep both of those offices, and we intend to invest in those offices...by bringing on new people, adding to the team," said Pitaro.
Yahoo intends to add its own search, click-through, and buzz data to AC's system "to help AC identify topics and trends and audience needs, and then produce content directly around it," Pitaro said. "We’ll now have the ability to scale out our niche content in these same verticals.
Once Tim Armstrong took the helm at AOL as CEO, many believed it would only be natural for the company to buy Associated Content. Armstrong, after all, was a co-founder and board member, and he's been an investor in AC.
AOL's Seed program, launched last year under Armstrong, has been considered AOL's answer to AC - a system for developing topics and commissioning contributions from writers, photographers, and videographers.
Around 70 percent of AC content is text-based articles, while the remainder is video, slideshows, or photos, according to AC CEO Patrick Keane, who met with ClickZ earlier this year. The firm partners with media companies including Reuters and Hachette Filipacchi.
In addition to commissioning content for publishers to sell ads around, AC also works with advertisers to develop branded content, and allows brands to run their ads around content on specific topics. For instance, Herbal Essences has purchased all hair-related content developed by AC. The company has also created content for Zappos, according to Keane.
Keane has been quick to differentiate his firm from Seed. For example, he argues that AC content is "more evergreen," and therefore less dependent on relevant to users indefinitely. "Our algorithms are more about valuation," he told ClickZ News.
Unlike AOL, Yahoo does not plan to build new sites dedicated to specific topics, said Pitaro. "We’re not going to build out 85 different sites within Yahoo. This is about taking this niche content and using it to complement and round out our existing properties."
"It also will help monetize sponsorship of new categories within our existing businesses...and fill in some of the voids that exist in these core sites," he said. For example, while Yahoo Sports currently does not have editorial staff dedicated to lacrosse, it can use AC to build out content related to the niche sport. "[Lacrosse] doesn't warrant hiring writers, but now we can use AC for that and can take it to market and try to bring sponsorship dollars on board."
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Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.