Yahoo acquires platform Luminate to bolster ailing ad business

The Internet giant buys another company, as Alibaba, the Chinese giant in which Yahoo has a large stake, moves closer to its blockbuster IPO.

Yahoo has acquired the startup Luminate, a service that focuses on advertising on top of online images, as the Internet giant tries to give its once-mighty ad business a jolt.

The service shut down earlier this week, and terms of the deal were not disclosed. TechCrunch earlier on Friday reported the news. Yahoo confirmed the acquisition to CNET.

The company, founded in 2008 in Mountain View, Calif., is an ad network with more than 180 million users and more than 6 billion image views each month, according to Luminate's website. The service lets marketers layer product, display and text ads over images.

"We are thrilled to be joining Yahoo, where we can continue to bring innovative experiences to an even larger audience," Luminate CEO James Everingham said in a blog post.

The acquisition is just the latest of CEO Marissa Mayer's more than 40 buyouts since she took the helm at Yahoo more than two years ago. The company has been looking to rejuvenate its advertising business, which has been in decline as younger competitors like Facebook have gained dominance in the online ad world. Last quarter, display revenue, an important financial metric for the company, fell 7 percent from the same period last year.

In February, the company introduced Gemini, a platform focused on so-called native advertising -- ads that fit in more with editorial content instead of being cordoned off like traditional ads.

The move also comes as Alibaba, the Chinese e-commerce giant in which Yahoo has a large stake, announced on Friday that it will price the shares in its upcoming initial public offering at $60 to $66. Yahoo, which has owned a 22.6 percent stake of Alibaba, will retain a 16.3 percent stake after the IPO, which is poised to be the biggest ever.

The Chinese company could raise up to $24.3 billion. That means Yahoo could rake in more than $8 billion before taxes, though the company has promised to return half of the IPO proceeds to shareholders. But the remaining amount could go toward funding more of Mayer's acquisitions.

Yahoo acquires startup Zofari to bolster local search

With its latest purchase, Yahoo looks to strengthen its local-recommendation chops.

Yahoo has acquired the local-search startup Zofari, adding technology that makes local recommendations, as the Internet giant seeks to strengthen its offerings around search.

The deal was announced Friday, but was reported earlier Tuesday by TechCrunch.

Zofari generates recommendations for local haunts like bars and cafes akin to how Pandora, the streaming-music service, creates personalized radio stations. It does that partly by culling information from other local-search services like Foursquare and partly by looking at places that users liked to generate the kind of "if you liked that, you'll like this" recommendations that Pandora and movie-streaming service Netflix are known for. Zofari said it was "inspired" by those services.

"We built (what we think) is a beautiful and powerful recommendation app," Zofari said in a blog post. While we've built an experience we couldn't be more proud of, we're a small company and have always dreamed of reaching users at a greater scale."

The purchase is just one of more than 40 that CEO Marissa Mayer has made since she took the reins at Yahoo more than two years ago, but it's aligned specifically with the company's desire to build out its mobile search offerings. The buy comes at a time when Yahoo's display ad sales -- an important financial metric, though becoming less en vogue as users move to mobile devices -- fell 7 percent last quarter.

"We're thrilled to welcome the team to Yahoo, where they will join our growing Search organization and continue to build amazing discovery experiences," a Yahoo spokesperson said, in a statement.

Yahoo has also been recently tending specifically to its ailing local-search business. In February, the Internet giant announced a partnership with Yelp to display its content, like ratings and reviews, on Yahoo search results pages. The senior director who orchestrated the deal, Anand Chandrasekaran, has since left Yahoo.

At the time the Yelp partnership was announced, a former member of Yahoo's local-search team told CNET the new efforts were overdue. "The platform was just rotting," he said.

He also pointed out that the actual technology around Yahoo's local-search capabilities suffered because of how siloed the company was. Like many of Yahoo's woes, it was mainly a legacy problem: The platform for, say, the Korean market would be different from the platform for the US market because of the way those platforms evolved separately from each other. The inconsistencies made it difficult for Yahoo to execute on plans related to improving the technology.

For now, Zofari will continue to run its services on the Web and on Apple's iOS for the iPhone and iPad and Google's Android mobile operating systems, which power devices from makers including Samsung. But, as with many of Yahoo's recent acquisitions, the company could discontinue the startup's product.