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Does Yahoo! Want to Ride the Facebook Boom?

By Daniel Sparks - Apr 1, 2013 at 6:30PM

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Yahoo!'s latest wave of acquisitions points to its realization that socially engaging content is king.

Major news websites are getting increasingly more of their traffic from Facebook (FB 4.11%). AOL's (NYSE: AOL) Huffington Post, an online newspaper, pioneered the world's most social-friendly news website by centering its strategy on platform integration, particularly with Facebook. Yahoo!'s (NASDAQ: YHOO) recent acquisitions suggest that new CEO Marissa Mayer plans to follow suit.

Success on Facebook is critical
In Facebook's announcement of its new timeline on March 7, executives repeatedly referred to Facebook as a "personalized newspaper." With a cleaner timeline and four additional categorized News Feeds, users get a more engaging experience.

The change is yet another reason news sites need to make social integration central to their strategies. As described in the company's press release, "[Facebook has] completely rebuilt each story to be much more vibrant and colorful and highlight the content that your friends are sharing. Photos, news articles, maps, and events all look brighter and more beautiful."

Source: Facebook Studio blog.

The content on Facebook makes up a complete package; it's more than a link or a story, explained Huffington Post's senior editor Dean Praetorius to AllFacebook. The new timeline places importance on accompanying photos. It's more important than ever to share rich and engaging images.

News isn't one-way anymore; it demands interaction. "We're putting the question out there for people to discuss. We're giving our answer at the same time, but we're making it something that everybody wants to talk about," explains Praetorius.

If any news website knows anything about Facebook engagement, it's The Huffington Post. According to a recent study by Newswhip, the site easily generates the most engagement on Facebook among all news sites.

Success on the social platform is imperative. Statistics confirm it: On average, 9% of all major news sites' traffic now comes from Facebook. This is up from 4% just 15 months ago.

Yahoo! is getting social
A quick glance at every Yahoo! acquisition since Marissa Mayer took the helm just five months ago reveals a focus on uniting content curation and social engagement.

  • Stamped: a mobile app specializing in social recommendations
  • Jybe: a personalized recommendation company that provides recommendations based on social contacts
  • Summly: a mobile newsreader app that curates news to make skimming easier

Not convincing enough? Just check out this excerpt from a Businessweek article on Yahoo!'s home page that was redesigned in February.

Most visibly, the redesign draws on a key element of Facebook and Twitter, introducing a "news feed" of live, endlessly scrollable content, which includes news stories, videos, and messages from advertisers. Users who sign in with both their Yahoo and Facebook credentials will see news stories tailored to their particular interests and indications of which articles their friends liked. "We think it's the right time to bring a more modern paradigm to Yahoo," Mayer said in an interview. "Overall it was important to me that the page be dynamic, that it feel very fresh, and that it be very intuitive, and that it really tries to embody beautiful design."

Yahoo! wants its content to be more engaging. Following Huffington Post's lead, the company seems to be setting itself up to get more prominent on Facebook.

Up more than 50% since Marissa Mayer took the helm, Yahoo! is still relatively cheap. I recently added the stock to my outperform CAPScalls.


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