The Reason Behind Yahoo’s Purchase of Flurry

Background to App Discovery

Global mobile ad-spend is predicted to increase 75% to $31.45bn as users are now spending over

50% of their digital time on mobile apps. This not only shows the importance developers are placing

on app marketing but also the difficulty of doing so. With a broken app store resulting in the top 6

tech brands (Facebook, Google, Apple, Yahoo, Amazon, Ebay) owning nine of the ten most used

apps, occupying over 75% of user’s time, this leaves little room for up-and-coming app developers &

large traditional brands.

Lack of Cookie Support & 3rd Party Audience Data

Additional problems such as a lack of cookie support and third party audience data on mobile have resulted in burgeoning acquisition costs. As CPM’s have started to rise, conversion rates are still lagging behind. It looks on the surface like a lot of acquisition is blind, a pray & spray approach to finding the right users, with little hope of making a positive ROI. User Profiling

All is not lost though, for several years companies such as Facebook & Flurry have been busy

collecting audience data, building up detailed 3rd party user profiles: seeing what apps people use,

how they use them, and who they’re friends with. This data has enabled Facebook to charge $0.50

CPC and still produce the lowest CPIs in the industry. Twitter is also going down the same route,

using real-time sentiment based on keywords.

Yahoo Purchases Flurry

Yahoo has for years been seen as a dying behemoth, but suddenly spurred into action by a

recalcitrant Marissa Meyer determined to bring Yahoo back to life, or at least buy Yahoo’s way to

success, has purchased Flurry, a pure-play mobile app analytics provider.

The sale cost hundreds of millions of dollars, and even though by all accounts Flurry was loss-making

and debt-ridden, and lacking scale compared to rivals, its audience data proposition was seen as a

golden goose by Yahoo, badly looking to bolster its mobile proposition.

Flurry’s data has the potential to be a game changer. Its Trojan horse product (Flurry analytics)

serves a vast array of app developers in return for being able to utilise their audience data & profile

their users. This can make the difference between Yahoo selling inventory at $2 CPM vs an enriched

dataset producing results costing $20 CPM.

Whilst this will not be sufficient for Yahoo to catch Google & Facebook on mobile, it is an important

step in the right direction, and also the reason why Yahoo valued Flurry at hundreds of millions as

opposed to tens of millions.

The Value of Audience Data

To put things into perspective, a campaign without audience data will probably achieve a 1-2% click

to download rate, and a large drop-off post-download due to uninterested users. But if you knew

exactly who you were targeting, the apps they have on their phone, and how often they use them,

then you could potentially double not just your conversion rate but also in-app engagement rate,

ultimately leading to greater revenue. Whilst, MobAd’s tests of Flurry have not yielded such positive

results yet, which belies still how early on the proposition is, it is likely when combined with Yahoo’s

back-end data to really have the potential to outperform rival exchanges such as Mopub and Nexage

still reliant on DSPs acting without detailed audience insight, and potentially lead to a greater share

of publishers moving to Flurry/ Yahoo to monetise their inventory.

In any event, this is a highly significant move for Yahoo and provides another useful step into the

pure-play mobile world, which it seeks to grow into, to ensure not just its future revenues, but

possibly also its long-term existence.

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