Joyus, the video shopping platform startup led by former top Google exec Sukhinder Singh Cassidy, said it had raised $11.5 million in a second round of funding, led by InterWest Partners and Time Warner Investments. Existing investors Accel Partners and Harrison Metal also participated.

In related news, Joyus said that Ido Leffler, co-founder of natural beauty brand Yes To, would join its board.

The San Francisco-based Joyus has now raised total capital of $19 million to push its efforts to combine video with retailing online. Along with the funding news, the company underscored the efficacy of its approach in a study it also released that it says shows “fashion, beauty and lifestyle brands can directly monetize video through direct response product sales.”

Using premium video content to flack its wares, Joyus said that it converts at 5.15 times the rate of visitors who only browse product listings on the site and that its viewers buy 4.9 times more than those who don’t watch the product videos.

“Every time someone watches a video, Joyus can measure the resulting sales revenue, creating the first ever metrics for return on investment (ROI) using online video to drive product sales,” said Joyus, which noted that on a half-dozen product areas that the average revenue per video (RPV) view ranges from 47 cents to 93 cents, meaning every thousand views of video on Joyus produces between $470 and $930 in direct sales revenue. Joyus shares a cut of the sales on its site with its merchants and provides the purchasing tools.

While others might dispute this performance and many online retailers have added video to their sales processes, Joyus CEO and founder Cassidy said in an interview that online retail has to shift from a focus on engagement statistics and monetization via brand advertising to direct product sales results.

“The data on video shopping needs to be aimed at a return on the investment rather than on just brand recognition,” she said. “We think by providing an informative and entertaining experience, where you can make purchases right away, consumers buy and that this is the direction online commerce is moving.”

As I noted in a previous post about Joyus when it launched in mid-2011: “If you think about a link-laden infomercial, you’ll get a general idea of what is being created by Joyus.”

While Cassidy did note that a comparison could be made to television shopping networks like HSN, which shows elaborate demos of its products, Joyus has its own tech stack and video platform that allows shoppers to watch in a non-linear way that is preferable online and also on mobile.

“We are aimed at those customers who are bred and born on digital, so the merchandising formula is different,” said Cassidy. “This is a shopper from 30 to 50 who wants entertainment and commerce together in a format that is convenient.”

That looks to be evident with Snapchat, the self-destructing photo messaging service that has exploded in popularity in just a short time. Even for mobile photo services — which are incredibly popular right now and certainly in no short supply — the growth rate is impressive, moving more than 150 million photos through the service daily.

Here’s a question: Why? Is there something inherent in the medium that allows a small company like Snapchat to dwarf Instagram’s daily photo volume in such short order? Part of the answer, at least, could be found in our inclination to forget.

“In this world, deletion as the default works pretty well,” said Evan Spiegel, founder of Snapchat, at our D: Dive Into Mobile conference. “We believe the default should be ephemerality.”

Interesting, considering that the focus of competitors like Instagram, Twitter and the like is on curation of an album over time, a collection of moments to be shared, reflected upon and ultimately revisited.

Obviously, people enjoy that aspect of mobile photos. Instagram is still considered highly successful, boasting more than 100 million monthly active users and a volume of more than 40 million photos moving through the service daily. It’s why Facebook bought the thing for three-quarters of a billion bucks.

But, as Snapchat proves, there are obviously other use cases outside of curation. Namely, photos as “communication rather than artwork,” as the young founder put it.

Not to mention the benefits of fading away. “Snapchat allows you to acknowledge where you are without having to have a picture of me in seventh grade with braces or headgear,” Spiegel said.

Here’s the big quandary. How does Snapchat monetize? It’s not like Facebook, Instagram or Twitter, in that there’s no flowing stream to easily stick ads into.

Still, Spiegel said he’s open to ads, in whatever form they may take.

“I like ads, personally. I think ads can work really well on mobile,” Spiegel said, citing a recent hire who will focus exclusively on monetization efforts. “We’ve been playing around with a few prototypes.”

Good news for Snapchat’s investors, I’m sure. I just hope that when and if ads do end up on the service, Spiegel can convince advertisers that users won’t forget them as well.

(Hat tip to the New Yorker’s Matt Buchanan for his wonderful use of the word “ephemerality.”)

Facebook COO Sheryl Sandberg might still be trying to figure out the social networking giant’s mobile monetization strategy, but there’s one thing she has locked: The top spot on two of the most important bestseller lists at the same time.

This week, for the first time, her “Lean In: Women, Work, and the Will to Lead” ranked No. 1 on the influential New York Times list for hardcover nonfiction, as well as for combined print and e-book nonfiction. The list, which appears in this coming Sunday’s issue of the New York Times Book Review, actually reflects sales for the week ending March 16, 2013.

“Lean In” has been on Amazon’s top 100 list of all books for much longer — in fact, for 32 days. The tome on the many difficulties faced by women in the workforce reached No. 1 status several weeks ago.

The official release date of the book was March 11, which was followed by a publicity blitz of massive proportions, including the cover of Time magazine, huge takeouts in innumerable newspapers, and laudatory television pieces on “60 Minutes” and with Oprah Winfrey.

“Lean In” has also attracted a huge dollop of controversy, with everyone and their mother (and my mother, Lucky, too) arguing over its merits, as well as its message — including whether Sandberg blamed women too much for the lack of advancement in the executive ranks.

She doesn’t, actually — if you read it, which many pundits appear to not have done. But that has not stopped the rigorous and welcome debate over the important issue, which seems to be exactly what Sandberg was aiming for.

Sales appear to have been widespread, but seem to also be helped by big purchases by companies such as Cisco, which are encouraging employees to read it.

Earlier today, Yahoo said it had acquired the trendy and decidedly stylish news reading app Summly, along with its telegenic and very young entrepreneur Nick D’Aloisio.

Yahoo said it plans to close down the actual app and use the algorithmic summation technology that the 17-year-old D’Aloisio built with a small team of five, along with a major assist from Silicon Valley research institute SRI International, throughout its products.

While Yahoo did not disclose the price, several sources told me that the company paid $30 million — 90 percent in cash and 10 percent in stock — to buy the London-based Apple smartphone app.

And despite its elegant delivery, that’s a very high price, especially since Summly has been downloaded slightly less than one million times since launch — after a quick start amid much publicity over its founder — with about 90 million “summaries” read. Of course, like many such apps, it also had no monetization plan as yet.

What Yahoo is getting, though, is perhaps more valuable — the ability to put the fresh-faced D’Aloisio front and center of its noisy efforts to make consumers see Yahoo as a mobile-first company. That has been the goal of CEO Marissa Mayer, who has bought up a range of small mobile startups since she took over nine months ago and who has talked about the need for Yahoo to focus on the mobile arena above all.

Mayer met with D’Aloisio, said sources, although the deal was struck by voluble M&A head Jackie Reses.

Said one person close to the deal, about the founder: “Nick will be a great person to put in front of the media and consumers with Mayer to make Yahoo seem like it is a place that loves both entrepreneurs and mobile experiences, which in turn will presumably attract others like him.”

Having met the young man in question, who was in San Francisco in the fall on a fundraising trip, I can see the appeal. He’s both well-spoken and adorkable, as well as very adept at charming cranky media types like me by radiating with the kinetic energy of someone born in the mobile world (you can see that in full force in the video below with actor and Summly investor Stephen Fry).

Still, D’Aloisio is very young and presumably has a lot of other entrepreneurial goals and that’s why he agreed as part of the deal to only officially stay 18 months at Yahoo, multiple sources told me. In many cases, startup founders strike such short-term employment deals with big companies, agreeing to stay for a certain determined time period.

He will also remain in England, where he lives with his parents, said sources. In addition, only two of Summly’s employees will go to Yahoo with D’Aloisio.

That’s $10 million each, along with a nifty app Yahoo will not be using as is (too bad, as it would up the hip and fun factor of Yahoo’s apps by a factor of a gazillion if it were maintained).

“It works out on a lot of levels,” said another person close to the situation. “Nick is a founder that will make Mayer and Yahoo look cutting edge.”

Cue the parade of PR profiles of the young genius made millionaire, helping Yahoo become relevant again.

I have an email for comment into the always friendly D’Aloisio. But I don’t expect a reply, since he has apparently been specifically instructed by the martinets of Yahoo PR not to talk to me any longer — well, for 18 months at least! (Don’t worry, Nick, I don’t blame you and will still listen to whatever you are pitching next, since you are so dang compelling and I enjoyed using Summly!)

Until then, here’s the faboo Summly video, with the best chairs ever:

Summly Launch from Summly on Vimeo.

At least that’s the conclusion of a new study run by mobile games studio Pocket Gems. The study compared different generations of iPhones, iPads and Android phones against how much their owners were buying within individual games’ stores. It found that higher-resolution screens correlated with more money spent in games for both phone operating systems, but not for the iPads.

“Android users with the highest resolution devices are nearly 10 times more likely to make in-app purchases than users with lower resolution devices,” Pocket Gems said in a press release. “For iPhones, the iPhone 5 monetizes nearly 4 times that of the older generation iPhone 3GS.”

Contrasting old and new iPads, however, showed no correlation between screens and monetization.

PocketGems CEO Ben Liu said screen resolution is “a good proxy” for a device’s processor power and memory, so it’s safe to assume that phones with better screens are offering a better user experience all around. However, he said, phones and tablets showed different results in the study because of differences in their upgrade cycles.

To wit: People who have the money to buy a new phone (which will probably have a better screen than their two-year-old device) as soon as it makes economic sense to do so are more likely to have disposable income to spend on virtual goods. However, Wi-Fi-only tablets not tied to a two-year data contract don’t encourage their users to refresh as quickly, so owners of the original iPad from 2010 seem to be buying nearly as much as their newer-iPad-owning counterparts.

(One interesting side note: The original iPad and the iPad mini, both of which lack a high-resolution Retina display, monetized better than the latest iPad, even though the latter has a much better screen).

So, why the huge gap between Android owners and iPhone owners? Liu said it’s because the Android OS spans all types of phones, from low-end to high-end, while Apple is more homogeneously situated in the high end (for now, at least).

The takeaway for game devs: If you have a choice when making games and, later, fixing problems, your time may be better spent on players with pricier devices.

PocketGems’ infographic showing the trends is below:

Lost in the sauce of the national work-from-home debate of last week that engulfed all things Yahoo, was a fascinating tidbit that several employees passed on to me from a recent Friday FYI meeting at its Silicon Valley HQ.

At the gathering, CEO Marissa Mayer talked briefly about the new telecommuting arrangements for some staffers, including the controversial new work-from-home memo that HR head Jackie Reses had issued that day.

But when Reses — who also wears another corporate hat as head of M&A at Yahoo — spoke she mentioned to the crowd that Yahoo was working on two “significant” acquisitions and about six smaller talent “acqhires.”

“It was kind of odd to telegraph it in such a big forum,” said one employee of Reses’ comments at the meeting in late February.

The revelation was unusual, to be sure, but perhaps not a surprise, given the recent run-up in Yahoo stock, its healthy cash position and, most of all, its need to add meaningful growth to the current efforts at turnaround.

And while some of its recent buys have been interesting and focused on improving its moribund mobile efforts, they have also been very small. And, as one high-ranking exec there told me, they “don’t move the needle in the way we need to in bringing in senior talent or loads of users or serious revenue.”

Indeed, while Yahoo shares have benefited greatly from the impressive performance by Alibaba Group in China, which is clearly on a roll, many think that showing actual improvement in its core business will be critical in the months ahead.

While making changes to Yahoo’s homepage and email, as well as cutting products, has been done, it is not yet clear what the impact is; the changes are aimed more at holding on to consumers rather than exciting them with new offerings.

Yahoo could also create its own new products to wow the masses, but that has been harder for it over the years. (Remember Livestand? Yeah, not so much.) In any case, an innovation infusion of such a large magnitude will take some time, given Mayer has to get the right people into place to do so.

Thus, a big purchase of an exciting new company with prominent leadership seems more likely than not and sooner than later. While Mayer has not articulated her vision for the new Yahoo in anything more than general ways, what she buys will say a lot.

Thus, sources said that Yahoo has been looking at a range of such acquisitions, in a number of categories such as advertising tech, mobile monetization and, of course, consumer “daily delight,” which is a phrase Mayer has used a lot.

It would be bold if Mayer went all out and made a mega-buy that would shake up the competitive landscape. My first choice for that is Pinterest, the scrapbooking phenom that was just valued at $2.5 billion in a new funding round. Mayer has also shown a lot of interest in blogging superstar Tumblr, while at both Google and Yahoo, as well as Foursquare, the well-known location app. Of course, there is also the troubled gaming giant, Zynga.

All are very pricey and would face rival interest, but such a move would be akin to Facebook’s billion-dollar blockbuster purchase of Instagram. Many now think that was prescient and cheap, given how important mobile photos are to the current digital ecosystem.

The list of possible big deals goes on: Hulu (which needs a tasty content element to make sense) as a video play; Millennial Media or Jumptap for mobile advertising; Quora for social answers; Flipboard for social media consumption; Rubicon or PubMatic, for ad targeting; and many more.

But all of those begin at the billion-dollar or more range and I have checked with a number of these and come up peanuts. Still, there are a whole lot of choices for Mayer and Yahoo in the $200 million to $500 million price range.

Here, Yahoo has the financial strength to make at least two of these significant purchases that Reses mentioned, as well as developing a much better reputation for Yahoo to keep real talent interested.

As one prominent startup exec, who had told me he never would consider selling to Yahoo in the past, said recently: “They are no longer complete losers, although Facebook and Google and Apple and Amazon are still cooler.”

Hey, it’s a compliment, even if it’s a back-handed one, so it will be interesting to see who finds Yahoo cool enough.

The program builds on Foursquare’s partnership with American Express, which launched just under two years ago, which allows Foursquare users to redeem special discounts and deals by checking in to local businesses after linking their Foursquare accounts to their credit card. The idea was, according to Foursquare, to make the experience less awkward than pulling out a paper coupon or waving your phone in front of the cashier (a la some daily deals services).

So in theory, the easier and less clumsy the process, the more folks will want to do it. And that makes everyone happy — including Foursquare’s bottom line.

“When users are having a great experience and merchants earn more money, we earn more money in the process,” Foursquare product manager Noah Weiss told AllThingsD.

Which is something Foursquare needs to take more seriously as it begins to mature and think of itself as a growing, viable business. The company of course has its previously announced paid promoted updates pilot program to offer businesses more ways to lure in customers, but that’s still being fleshed out, and needs time before it scales widely.

That, combined with Foursquare’s added analytics dashboard that can help business owners see more information about the types of people spending money at their stores, could prove to be a fairly powerful tool set for understanding their customers.

For now, with any luck, the number of people using Visa, Mastercard and debit cards — which is pretty much everyone in the U.S. — will beef up Foursquare’s deals revenue. That is, if folks continue to check in.

On Yahoo’s recent fourth-quarter earnings call, CEO Marissa Mayer called the company’s mobile efforts a “nascent source of revenue,” a theme she reiterated in her appearance earlier this week at a Goldman Sachs investment conference in San Francisco.

There, she said that the company was going to cut down on its apps portfolio from more than 60 to “the dozen or so applications that people use all the time on their phone” to turbocharge efforts in the key arena.

Touting her mobile aspirations, as well as noting Yahoo’s clear weakness in the area, has been a carefully concerted Mayer effort to get in front of investors’ worries about the company’s mobile performance.

In fact, Mayer addressed the issue in an interview with Bloomberg recently, noting rhetorically: “Given that we do not have mobile hardware, a mobile OS, a browser or a social network, how are we going to compete?”

How, indeed.

Because, according to sources inside the company, direct mobile revenue hovers only around $125 million annually, mostly from search revenue on mobile devices. While users are consuming lots of Yahoo Web pages on their phones, which could technically boost the sales numbers higher, rendering most desktop-created ads on mobile is not the same thing as the significant mobile revenue Yahoo needs to generate.

There’s no question that Mayer has taken every public opportunity she can to talk about how important mobile is to Yahoo’s future and how she is going to double down in the area. Along with loudly proclaiming her commitment to the fast-growing sector, she has also bought a number of small mobile startups since she arrived at the Silicon Valley Internet giant last year.

Last week that meant Yahoo scooped up Alike, a mobile app that helps users discover nearby venues and places to visit based on your interests.

But, while these acquisitions are all interesting and important to spur innovation and consumer engagement, they are still very tiny steps to solving the big problem for Yahoo to make mobile a truly significant revenue stream without any of the most critical elements of the ecosystem that rivals have.

It’s not that Yahoo has not tried in the past, having mounted several aggressive and quite elaborate mobile efforts over the years. But, without going into painful detail, most have had little traction overall and no needle-moving revenue to speak of.

The constant shifting of mobile-focused execs has been another difficulty, with little continuing leadership since Marco Boerries left in 2009. To fix that, Mayer appointed Adam Cahan as Yahoo’s mobile product kingpin in November. The former IntoNow founder and CEO oversees all mobile efforts, as well as its Flickr photo sharing service.

But mobile monetization is another issue, without a significant mobile advertising czar in charge — a task which then presumably falls to new COO Henrique De Castro. But while the Google exec is an experienced enough online ad exec, he was definitely not known at the search giant for any serious mobile expertise.

Yahoo will need that and fast, because however you count mobile revenue at the company, insiders there admit it is extraordinarily low. That’s probably why Mayer declined to share specific mobile revenue figures in Yahoo’s recent fourth-quarter earnings call, instead touting 200 million daily active mobile users.

Impressive? Not exactly. By comparison, Facebook said it had 618 million daily active mobile users with 23 percent of its $1.33 billion in Q4 revenue from mobile, from an almost zero base a year ago.

That’s 10 times more than Yahoo — about $300 million a quarter versus $30 million.

Interestingly, at the Goldman conference, Mayer made the point that no one has cracked the mobile monetization puzzle. True enough, but both Facebook and, of course, Google are well down the road to doing so, while Yahoo remains stalled as yet.

To be fair, the acceleration of mobile monetization at Facebook is perhaps easier for the social networking giant, which has been achieving that by leveraging its singular product and audience and building its own mobile ad technology.

And Google has already been hard at work retrofitting its massive search business to aim at mobile, has strengthened its efforts with the purchase of AdMob and Motorola and, of course, has made the early and enormous investment in its Android platform.

From a stand start, it’s all a much harder task for Yahoo, which has a plethora of product offerings that all require different mobile monetization solutions. It’s a bigger problem since Yahoo’s own mobile ad targeting and contextual search is considered weak and unable to serve better targeted ads in a variety of mobile experiences. That means things as simple as when you search for a sports game, you get a beer ad.

In improving this, Yahoo has few choices — building it up in-house, acquiring a company with mobile ad expertise or partnering with someone in a significant manner, which most suggest is its best alternative in the short term.

The first is certainly important, which is why Mayer is pursuing the range of mobile startups she has, seeking both apps consumers will love and engineering expertise in the area. That is all well and good, but focus has to be on creating great products first and, as Mayer has said repeatedly, money should follow.

The second has also been considered, with Yahoo looking at a range of possible acquisitions to improve its mobile ad technology. In this, because of Yahoo’s huge scale, there are still few choices, boiling down to the larger players, JumpTap and Millennial.

Yahoo has mulled over acquiring both over the years and even recently, although the price tags are high and there are issues about whether this will solve the problem or not.

One possible short-term alternative is to do some kind of mobile advertising or contextual search deal with Google and perhaps one with Apple, which has its own iAd offering.

According to sources, Yahoo’s current search partnership does not preclude the company from working with Google in certain mobile monetization areas. In fact, the pair recently struck a deal, as Peter Kafka wrote, “to begin running some of its AdSense display ads on Yahoo sites, and will become one of several ad networks Yahoo uses to fill some of its pages.”

That’s money in the bank for Yahoo, which Mayer — an ex-Googler, too — knows might extend well to mobile monetization and innovation. She has famously handed out free smartphones to all employees, which is a nice touch and also an important message to send to them and others.

But it will take a lot more than an iPhone in every cubicle at Yahoo, because mobile is the issue she will be scrutinized for, given the stress she has put on it as one of the key ways to revive Yahoo.

“There is no question Marissa will be judged on bringing the product management expertise she demonstrated at Google to Yahoo to make things consumers want to use in mobile,” one top Yahoo insider told me. “The thing is, she has to also actually make some real money doing it.”

Earlier today Yahoo reported fourth-quarter earnings that beat analyst estimates, on still-flattish revenue.

Still, up is up, even if it is not really that much up, so Wall Steet bid up shares of the Silicon Valley Internet giant in after-hours trading.

Now it’s onto the conference call with investors for CEO Marissa Mayer:

2:02 pm: Before the call, you can hear Mayer complaining about the goofy music played during the pre-conference call waiting time.

“We have to get better music,” she says to some minion. “This is not good music.”

Music to my ears! I say we get Beyoncé, lipsyncing or not.

The call starts quickly after that, with the ever-eager Mayer leaping right in with the fourth-quarter news, which is not all that bad.

It’s the first full year of growth in a while — though not the first quarter-to-quarter increase — even if it is only a very modest two percent increase.

That compares to industry-wide gains in revenue of many, many, many times that, but for Yahoo this is cause for a parade. A small parade, with good music, but a parade nonetheless.

“It’s hard to believe this is only my first full quarter here at Yahoo,” says Mayer in an upbeat tone.

She notes that her focus on product excellence and user experience was continuing, with some “early positive trends” in both products and people.

Mayer then list a series of moves, from the free food and better smartphones for employees to the addition of well-regarded entrepreneur Max Levchin to the board to the refreshes of Yahoo Mail and Flickr to the acquisition of some sassy new mobile startups.

Mayer also notes that the company under her purview had removed “385 of highest priority obstacles,” although she did not name any specifics.

I imagine what No. 332 is: Switching out the iceberg lettuce at the URL cafeteria on Yahoo’s Sunnyvale, Calif. HQ campus with some tasty organic mesclun as they have at Google, from whence Mayer came.

Better roughage means better returns!

2:14 pm: Mayer turns the call over to CFO Ken Goldman, also a newbie. As usual, he runs through the numbers that are already in all the releases already. But I am enjoying his New England accent, hoping he will say the slight increase in revenue was “wicked” good.

Goldman, in fact, calls the revenue increase “modest,” which is true, although it sounds like “mah-dist.”

What’s not mah-dist is how much stock Yahoo has bought back, using its windfall from the recent sale of assets in China. It’s $1.45 billion, with more that that left to use for more share buybacks. That should keep Yahoo’s stock up nicely.

Goldman also talks about increases in the company’s search business, although notes that the Microsoft relationship is still not the most fantastic.

He speaks more effusively of Yahoo’s Asian partners, including Yahoo! Japan and China’s Alibaba Group. It’s deserved, since they have been the company’s treasure trove against its meh core performance in recent years.

Not so tasty is the problem Yahoo has with a big-money contract dispute in Mexico, which Goldman reiterates is “without merit.”

2:28 pm: Goldman moves onto Yahoo’s cash position, which is strong and which he says is going to be used to make the company better.

Mayer is back on board, talking about key focuses over multiple years.

She says Yahoo needs a “chain reaction of growth,” which needs to be fueled by a dozen new products that become a daily habits for consumers to increase usage and other metrics.

A nuclear bomb explosion is not exactly the best metaphor for a company’s turnaround, but in Yahoo’s case it is probably a pretty good one, given how stubborn its decline has been.

Mayer then switches the metaphor to one she recently used about “returning to the roots” of Yahoo.

Actually, mixing the metaphors, Yahoo has to blast some significant roots that have gotten in the way of its innovation over the years.

“The best is yet to come,” promises Mayer, in what she says will be a multi-year effort.

Now onto questions from the analysts!

2:40 pm: The first question is about commercialization of its products. Mayer answers she is both pro-advertising and anti-ad — meaning they are good when they add to user experience and bad when they do not.

There will be slight margin declines due to this, which is the real point of the query, which Goldman says will not be too impacted.

The next question is on the weaker performance in display ads and whether mobile ads can ramp up quick enough or not.

Yahoo is not breaking out mobile revenue numbers as yet — it’s not impressive as yet, so that’s what’s going on there — although Mayer points to the number of mobile users increasing to 200 million now.

As to the declines in display, Mayer gives a non-answer, but it is likely due to big changes that new Yahoo COO Henrique De Castro has put into place in the way it sells ads and which AllThingsD.com previously reported on. Mayer earlier in the call had confirmed those changes.

The fact of the matter — which is just what the analyst was asking about — is that Mayer simply has to improve display revenue, which is Yahoo’s core business.

Mayer then addresses the issue of not providing usage metrics anymore. Yahoo has withheld a lot of them since she has taken over, and she says it is because they are not indicative of metrics that, well, she thinks you need to know.

Instead, Mayer points to other metrics that she feels are better, such as number of ads sold and price per click on search.

Speaking of search, the next question is about that. What can Mayer say — and she does — but that Yahoo must also improve in that area. Indeed, it is lucrative low-hanging fruit for the company.

Here comes an interesting observation she makes based on a question of mobile versus desktop, which Mayer says should not be separated as two areas as consumers don’t think that way.

Yahoo is tuning up a dozen products, she says, having started with Yahoo Mail and its Flickr photo-sharing app.

2:54 pm: Mayer is not saying which of this dirty dozen is next to get a makeover.

“We’re investing in small, nimble, excellent teams,” says Mayer, who then tries to reference a famous Margaret Mead quote, but ends up mangling it a bit.

It is, for the record: “Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.”

This is true, which might make some Yahoo staffers nervous, since Mayer’s recent stack ranking of them means she can start on employee layoffs anytime she likes to separate the wheat from the chaff.

3:01 pm: Whoo-whee, this is going long and I am getting weary. Mayer has to be some kind of digital Energizer Bunny — she just flew in from the World Economic Forum in Davos, Switzerland and moved right into the prep for the Q4 earnings.

Tomorrow, she is presumably off to Las Vegas, where Yahoo’s global sales conference will start and she will doubtlessly be making an appearance.

I am exhausted simply by walking up and down the stairs at my house.

The next question is about third-party publishers and ad tech on mobile.

“Mobile monetization is new for everyone,” she says correctly, making the point that no one knows what is going to shake out.

She uses — as she has used — the example of when people thought search was not a moneymaker until Google proved otherwise.

The problem is, of course, that Google is Yahoo’s biggest rival in this new mobile ad arena, along with Facebook and many others. And Google, as its recent results showed, does know how to make money compared to Yahoo.

The next question is about mobile monetization eating into desktop revenue.

Mayer notes that Yahoo has hired 120 people with computer science degrees in the quarter to work on that area.

In other words, get ready for a symphony of geeks to return Yahoo to relevance.

Would they can pull it off, as that would be a tune worth listening to.

Speaking of something worth listening to, here is a video of Diana Ross’ song, “Chain Reaction,” to enjoy:

Merry Christmas, Kevin Systrom!

The accusations leveled? Funes is mad about Instagram’s set of Terms of Service amendments made last week, which caused widespread furor among the app’s user base. The suit, which was first reported by Reuters, claims breach of contract based on “the implied covenant of good faith and fair dealing,” along with a handful of other California civil code breach accusations.

“We believe this complaint is without merit and we will fight it vigorously,” a Facebook spokesman told AllThingsD.

In a nutshell: Instagram freaked everyone out last week when it updated its ToS, stating that the service had a right to introduce advertising products that accompanied user photographs. Along with the distaste folks had at the thought they may start seeing diaper ads plastered alongside pics of their kids’ faces, the uproar eventually made it seem like Instagram would sell the content created by users in their photos.

Eventually, Instagram dialed back the language, publishing an apologetic note to its site near the end of the week. But the damage had been done, as thousands of users had sworn to leave the service in favor of other photo-sharing applications — in particular, the recently updated Flickr app for iOS.

Funes and company’s biggest grievance with Instagram lies in that cancellation grey area; If users decide to delete their accounts, “customers forfeit all right to retrieve the Property that was previously entrusted to Instagram, which retains rights thereto in perpetuity,” the filing states.

The money quote: “In short, Instagram declares that ‘possession is nine-tenths of the law and if you don’t like it, you can’t stop us.’”

Bummer of a present for CEO Systrom on Christmas Eve. Here’s hoping the gifts left in his stocking fare better.

The proceedings won’t move much until 2013, so for now, head on over to McSweeney’s for another fantastic privacy policy update, courtesy of Santa Claus.

Oh, and here’s the filing if you want to check it out:

Instagram Lawsuit

Preparing for an eventual IPO isn’t easy, taking years of planning, of careful strategy decisions, of picking your people perfectly. Even then, things can still go wrong. Just ask Facebook.

While an initial public offering is still far down the road for Twitter, perhaps sometime in 2014 at best, it seems the company wants its house in order now.

The culmination of this came on Wednesday evening as Twitter shuffled two of its highest-ranking execs, shifting Ali Rowghani from his position of CFO to COO, while moving recent hire and former Zynga treasurer Mike Gupta into the CFO seat.

Joi Ito/Flickr Newly dubbed Twitter COO Ali Rowghani

In typically understated Rowghani fashion, the move went down rather unceremoniously. Rowghani and Gupta updated their Twitter profiles with their new titles at some point on Wednesday. After word got out, CEO Dick Costolo congratulated the two men over Twitter.

Rowghani has long been a quiet, behind-the-scenes force in the organization, preferring to take a backseat to the limelight so often reserved for Costolo and co-founder and now Twitter board Chairman Jack Dorsey. Despite holding the CFO title for the better part of three years, Rowghani has worked in a major operational role inside the company, acting as Costolo’s most trusted adviser. Wednesday’s appointment just made it official.

But Twitter’s C-suite troika isn’t the only part of the organization that needed tweaking. Over the past year and a half, the company has quietly cherry-picked talent from around the Valley and re-organized its ranks — or “grew up,” if you will — better suiting itself to become a tech company to take seriously.

From the top down, Twitter looks much different than it did just a few years ago. Product, the core of Twitter, was split into three separate areas: Consumer, growth/international and revenue. Michael Sippey and Othman Laraki focused on consumer and growth/international, respectively, while splitting revenue responsibilities (after the departure in June of former product VP Satya Patel).

Engineering is almost entirely transformed. I’ve been told Twitter poached literally hundreds of Googlers to join the ranks of the engineering department, an area which was sorely deficient in 2010 considering the scale and growth of the product’s reach. Now Adam Messinger and Chris Fry have joined as engineering heads from Oracle and Salesforce, respectively. I’m told that both are recruiting heavily from their old organizations, too, bringing on much new engineering blood at a fast pace.

Design VP Mike Davidson

The design department is also in flux. New arrival Mike Davidson has been snatched away from his Seattle design gig to lead Twitter’s efforts as VP of Design, working with existing director Doug Bowman. Both are currently pushing hard to recruit new design talent, looking to fill nearly 10 slots in the department (while that sounds small, it’s nearly a quarter of the team’s current numbers).

Sales is no different. President of global revenue Adam Bain snatched up Richard Alfonsi from Google in June to be VP of global online sales, and tapped Xooglers Shilesh Rao and Stephen McIntyre, too.

The overall goal is this: At six years of age and now 200 million active users, Twitter is maturing beyond the scrappy start-up it was in its early days. On the one hand, that environment contributed to some of its most enjoyable early qualities for many employees. But I’m told by multiple people close to the company that part of the organization’s maturation means moving away from hiring the “generalist” types that populated early Twitter, moving instead to highly specialized industry veterans who have strong experience with very particular sets of skills.

In theory, that means reliability — of internal departments, of site infrastructure, of revenue, of a business model — of the type that makes a company stick around for the long haul. And ideally, it moves out from under the shadow of Twitter as the Valley company known so famously for its tales of internal strife (Costolo has often referred to the company’s bad rep as “palace intrigue,” not to be taken seriously).

If it’s an idyllic setting I’m painting here, part of Twitter’s process of closing ranks, it’s also not without its problems.

The company has swelled with new hires in a relatively short amount of time, ballooning up from a couple hundred employees to around 1,500 in under a year.

New talent is good, but explosive growth in such a short amount of time takes its toll on the company’s structure and DNA. Each new top recruit from Google has brought with him or her a host of new Googlers. So much the case, this is, that I’m told it’s not uncommon to hear new recruits explain “how we did things at Google” during team meetings or while working on collaborative projects.

DragonBe/Flickr

And with such an influx of new blood, I’m told many of the old guard are finding it difficult to recognize the Twitter they joined. Internal disagreements with Twitter’s new stance on its platform rules have been cause for some grumbling. The design team has seen a near exodus over the past two months (for many reasons, but not the least of which is Twitter’s changing internal vibe). The Google management style, incorporated — however unconsciously — by many of Twitter’s top talent, doesn’t always translate well when brought over to Twitter.

To put it another way that I’ve heard so often from current and former employees: Twitter is slowly growing more corporate in feel, day by day.

Is that a bad thing? Perhaps, if you’re a Valley type looking to live the start-up life. But if you’re a business on a trajectory with an IPO in a few years or less, perhaps Twitter is right where it needs to be.

They like her, they really like her.

Wall Street, that is, in regards to new Yahoo CEO Marissa Mayer, assigning the former Google exec a clear premium.

And whether it is deserved or not yet from a pure performance perspective — we actually won’t know for several quarters ahead — the shares of the Silicon Valley Internet giant over the past three months have gone up 22 percent. The rise has taken place pretty much on the promise that she will finally be the one to deliver what no other Yahoo leader has done.

And that is, besides making the company relevant and innovative again: Getting Yahoo’s stock past $20 a share again.

That’s within striking distance now. Shares are at $18.40 today, close to an all-time high for the year. The recent rise certainly isn’t taking into account the results of the recent lackluster third quarter, which continued to show the worrisome downward trends — even though partial asset sales of the company’s Chinese Alibaba stake successfully masked the problems — in growth, engagement and overall profitability.

But Mayer’s confident I’ve-got-this tones on the earnings call itself — especially in pushing a mobile strategy that has not been put in place as yet in any substantive way — won over Wall Street investors, who apparently like how she sounds and, thus, are intrigued with what she might do.

While this kind of perceptual game will only get Yahoo so far, moving out of the teens in share price would be an important benchmark for the company.

The stock was last at that level in August of 2008. At the time, in fact, $20 a share was considered very disappointing, taking place after Microsoft dropped its $44.6 billion hostile bid for Yahoo a few months earlier. Indeed, $20 was a big comedown from when Yahoo shares were above $43 in 2006.

The lowest price Yahoo shares got in recent years were $9.39 in November of 2008, just before then CEO and co-founder Jerry Yang stepped down.

Now the stock is close to double that sad trough, fueled in part by some cosmetic moves to improve culture by Mayer — including free food, smartphones and a promise to end the slow-moving decision-making at Yahoo.

There has also been a start of the promised multi-billion-dollar stock buybacks by the company, although Yahoo has been cagey about how and when it is purchasing. Also helping, more recently, is that several big hedge funds are buying into the story of hope.

Following in the footsteps of successful activist shareholder Dan Loeb of Third Point, who is now on the board and is a major Yahoo investor, others like him have now joined in the party in a bigger way. That includes David Einhorn of Greenlight Capital and Chase Coleman of Tiger Global Management.

The thoughtful Einhorn, who is a friend of Loeb’s, has been in and out of the stock before, buying it on hopes that now ousted CEO Carol Bartz would be Yahoo’s savior and selling it soon after it was clear she might not be. He came back in February with three million shares, sold them in May, but now has upped his stake to just over five million more under Mayer’s regime.

More substantively, Tiger’s Coleman has grabbed 25 million shares (interestingly, he’s also upped his stakes in Groupon and Facebook).

Obviously, they must believe Yahoo is set to move upward, which all depends on Mayer. She’s made one critical stock misstep early in her tenure, by announcing that she was considering keeping the huge cash windfall from its sale of Alibaba stock and not giving it back to shareholders in some form.

That dropped Yahoo’s shares to under $15, but Mayer walked back that mistake and the stock has been climbing since.

For the year to date, it’s up almost 14 percent — a nice rise — although that pales in comparison to Apple’s 39 percent rise, Amazon’s 37 percent rise and, most of all, AOL’s 136 percent leap.

The comparison to the massive stock run that AOL has had, after CEO Tim Armstrong — also a former Googler — cut costs, focused units, sold patents and bought back stock, is often made. It’s perhaps apt, but arguably Yahoo has much better and fixable assets than AOL.

More to the point, Yahoo’s price-to-earnings ratio remains unusually low — it’s 5.6, compared to the S&P’s 14.2 average — which means that the entire business is severely undervalued by Wall Street.

It is if Mayer can create real value by actually staging the comeback she is already getting credit for accomplishing. She certainly has a lot of levers to improve results, from the stock buyback to finally making a deal to sell its multi-billion-dollar stake in Yahoo! Japan to making expense cuts to buying some innovative small start-ups to creating products that aren’t, well, lame.

Most importantly, Mayer has to stop the decimation of Yahoo’s once mighty advertising business, which makes up the bulk of its revenue, as well as improve its search monetization by rejiggering its heretofore dysfunctional partnership with Microsoft. (But, as I wrote earlier this week, she will not be making new search engines with Facebook.)

A gander at this chart of Yahoo’s declining quarterly revenue should give you a good visual of the problem with the core business:

YHOO Revenue Quarterly data by YCharts

And, indeed, Yahoo’s sales have dropped 29 percent since 2007, with typically flat display revenue and declining search revenue, which was once Yahoo’s crown jewel. While operating margins have risen over the years, very few point to the company as an exciting growth story.

And it still isn’t, although investors are starting to consider it a possibility. We’ll see as Mayer makes more significant changes in 2013, hopefully underpinning the stock’s recent rise with a true story of financial strides.

But, for now, giddy shareholders probably should not get too far ahead of themselves. Not that you can stop them: Mayer fan Eric Jackson is calling for Yahoo’s stock to be over $40 again by end of 2013.

Whether the Mayer premium can do pull off that particular investor miracle or not remains to be seen.

andersphoto / Shutterstock.com

The Finnish phone giant is working with Israel’s Inneractive to create Nokia Ad Exchange (NAX), which officials say will enable access to 120 different ad networks across the globe, with the opportunity to gain revenue in more than 200 countries.

“It really is a single point for developers to monetize any app that they have or (to) promote other apps,” Nokia developer relations executive Richard Kerris said in an interview.

The other pitch Nokia is making is offering a greater-than-typical cut to developers, promising 75 percent to the app maker, with Nokia and Inneractive getting the remaining 25 percent.

In addition, Nokia is also offering developers a bunch of added benefits to those who take part in a new premier program. For $99, developers get membership in Microsoft’s Windows developer program, technical support and as much as $1,200 worth of real-time notifications, enough for 12 million API calls.

Shares of Facebook rose upward of 20 percent as of midafternoon on Wednesday, a four-point rise that brought the price to $23.57.

But the company shouldn’t celebrate too hard, too fast. We could see millions of Facebook shares flood the market on Monday, the day millions of restricted stock units (or RSUs) are eligible for sale on the public market.

The concept of the RSU is fairly straightforward. It’s a way to retain employees by giving them stock. But as with any IPO, the company employs a lockup period limiting the sale period to a given date, so as not to affect the company adversely. So, for example, many stock sales limitations were in effect for employees as Facebook went public. As a result, the stock price didn’t drop as a result of employees cashing out fast. (It dropped anyway, for other reasons, but that’s another story.)

So, through the end of the month, those Facebook insiders will now be able to sell their stock, potentially putting on the table more than 230 million Facebook shares. That could certainly have an effect on the company’s share price.

And, just a few weeks from now, Nov. 14 is an even bigger day: Another lockup expires, putting more than 1.2 billion in employee RSUs on the table.

It could be a relatively good time for employees to sell, too. Wednesday’s bump in share price comes in the wake of positive Q3 earnings results yesterday, in which the company reported that 14 percent of its $1.262 billion in revenue was derived from its mobile products.

Mobile, in particular, has been a point of contention for Facebook. The large consumer shift from desktop to mobile devices over the past two years has often been cited in criticism of the social giant, which makes the bulk of its revenue in advertising that appears alongside of content inside the network. The limited space on mobile devices makes it much more difficult for Facebook to insert its desktop ad product into the stream without feeling obtrusive.

CEO Mark Zuckerberg “wants to dispel this myth that Facebook can’t make money in mobile,” he said on a conference call with analysts on Tuesday. COO Sheryl Sandberg backed that assertion up, citing the potential of a number of Facebook’s recently launched advertising products and the impact they could have on revenue. While mobile app ads, promoted posts and gifts are all relatively new to Facebook’s monetization strategy, the company is bullish on them in the long term.

The wild card, however, remains Facebook’s payments business. Facebook posted revenue on the “payments and other” line at $176 million in the third quarter, a decline of 9 percent quarter on quarter, down from $192 million. The company largely attributed that to the underperformance of Zynga’s social games, which saw a 20 percent decrease compared to the year-ago quarter.

Whatever the case, Facebook’s stock isn’t out of the woods quite yet. Come Monday, we’ll be keeping an eye on the Nasdaq.

Facebook turned in a third quarter that met worried investor expectations and also showed a nice start to its mobile monetization efforts.

Time to reconsider dumping on the social networking behemoth by Wall Street? Well, there is Zynga and the need for even more monetization success to turn Facebook back into the digital darling it once was (pre-IPO, that is!).

Now it’s time to see if the company’s management can start that ball rolling in a conference call with analysts:

2:02 pm: Oops. Some screw-up on the call logistics. A tip: We can hear you, Facebook execs, so stop discussing your screwed-up mute button and saying “Omigod.”

Just sayin’!

(It’s not like you are Google and released the earnings early, ya know!)

Now, the real call begins with the investor lady and then CEO and co-founder Mark Zuckerberg.

Almost the first words out of his mouth: Mobile and monetization.

Investors apparently misunderstand the situation. Mobile, which is killing desktop advertising, is an opportunity and not a problem, says Zuckerberg.

Mobile, mobile, mobile, mobile — it’s good news!

That’s why Facebook is releasing better apps and speeding up the experience to make those mobile users more engaged.

“I believe over the long term that we’re going to see more monetization from mobile than over the desktop,” says Zuckerberg, who sounds like he believes it (he has to, of course).

2:09 pm: He wants to “dispel this myth that Facebook can’t make money in mobile.” It can! $150 million this quarter! Hey, that’s no small potatoes! (Actually, it is small potatoes, but impressive still.)

Zuckerberg goes into the importance of social, before telling us we are once again misunderstanding the gaming situation.

Here’s his take: Zynga might be stinking these days, but other games are doing great.

Then onto Instagram — here is where I must disclose that I love that photo-sharing app like three people I dated in college combined — which is going great.

Then, talking quickly as if his life depended on it, it was on to the apps platform, then the new Gifts service and more.

Phew.

2:14 pm: Now it is only COO Sheryl Sandberg, who uses a slow-jazz tone in talking about advertising.

Facebook met Wall Street expectations and Sandberg calmly explains how science and art (Internet people love this way of describing the ugly business of advertising) in marketing is working.

She outlines the focus on ad products first, including customizing audiences, Facebook’s ad exchange, offers and promoted posts.

Sandberg then talks about improving the return for advertising on Facebook for marketers — called ROI. She goes into a bunch of stories of success with hotels and cellphone companies and such.

Sam’s Chowder House loves Facebook, by the way.

Then, of course, Sandberg is onto mobile — which has been Facebook’s demon since it went public.

The mobile-will-not-kill-us-but-make-us-stronger meme continues.

Actually, it has killed the stock so far, but Facebook is not going to give up.

“We have become one of the largest mobile advertising platforms in only eight months,” says Sandberg. Take that!

2:23 pm: Sandberg turns the call over to CFO David Ebersman, who has gotten a lot of the flack for the IPO disaster.

Water under the bridge — he launches into Facebook deets about how big it is and how strong the network is.

Ebersman goes into the numbers, which are all in the press release — which is my cue to go get a donut.

2:29 pm: Donut run was a success and Ebersman still blabbing, but wrapping it up and it is time for questions.

The first question is about engagement on mobile, which is an interesting concept to think about, and how the mobile monetizaton is trending.

Ebersman notes that engagement is just fine and says that mobile is ramping as a percentage of revenue.

Next question: Mobile! Does it cannibilize other parts of the business? Kind of, says Sandberg, who notes it is part of strategy.

Next question: More mobile!

Yes, Facebook is baking them as fast as advertisers can gobble them up.

Next question: Guess what? Not mobile? Sorry. It’s a veiled query about ranking what is important in terms of monetization.

Thank goodness, someone asks about possible plans for an ad platform and also a possible search initiative.

Zuckerberg does not really say much, except there is some experimenting going on around ad platforms (fyi, it is coming). He ignores the question about a search product to compete with Google.

2:41 pm: Still more mobile questions, which Facebook execs are doing a good job of answering.

Essentially: We’re on it, people, so chillax!

Here comes one out of left field about whether click-through rates on small devices are by accident due to “fat-fingered clicks.”

Ah, the fat-fingered click crisis!

This is why I could not be a public company exec — I would start giggling at the term “fat-fingered click.”

Back to serious stuff, like mobile ads and the ad platform.

The next question is on the nature of the advertiser base and the geography of that group.

Brand. Direct. Local businesses. Developers. These are the legs that Facebook’s business stands on!

Sandberg says she really thinks local businesses in particular is one arena that is a big opportunity.

In terms of geography of advertiser, it skews more toward developed world, says Ebersman.

A big-picture question for Zuckerberg: Now that he is not desktop king, how does he like being a little app in a world of mobile giants such as Apple and Google?

Zuckerberg is not worried — he gets more users, more time spent and more monetization.

He don’t need no stinkin’ mobile operating system! Facebook will be just fine on the weensie new iPad! Or the weensie new Nexus 7 tablet!

A question about good experiences for users and the need to market to make money.

It’s not a trade-off, insists Sandberg. Well, it is sometimes, but she is stressing that good ads can be good for users.

A final question! It is on any good news of offline demand generation, whatever that is. It’s a question about if Facebook is grabbing business from others.

Sandberg does not answer exactly, but notes Facebook is rolling out lots of products to compete with all the other advertising options out there.

It’s kind of a flat end to a call.

But if you want one true takeaway, it’s this: Facebook hearts mobile.

Yahoo turned in a meh third quarter, which came as no surprise to anyone. But none of it matters, since all eyes were on what new Yahoo CEO Marissa Mayer would say on the investor call today.

Here we go! It is Mayer’s first outing as a public company CEO. She’s been an exec at Google her whole career and, while she has been a prominent public figure in Silicon Valley, she has never run the whole show herself.

Until today, that is!

2:01 pm: Finally, we are hearing from Mayer, who arrived from Google in July.

She is “thrilled to be at Yahoo” and the first 100 days at the company have been a lot of fun.

She’s apparently been a fan since her undergraduate days at Stanford University.

Finally, she tries to answer the big question: “Why did I in particular come to Yahoo?”

Why, indeed, given she and others at Google have spent those years since college putting Yahoo directly into the ground. (Did you know Yahoo gave Google its first big search break, a deal engineered by Mayer and others?)

But, says Mayer, Yahoo is “tailor-made for me,” ticking off arenas such as “search, mail, advertising, home page.”

It’s what she built her career on, apparently — yes, in kicking Yahoo’s behind — but now she wants to help the troubled Silicon Valley Internet giant “grow and help redefine” itself.

Still, she stresses, trying to buy as much time as possible from investors: “It will take multiple years to get to where I want the company to be.”

2:08 pm: Mayer, of course, touts her Apple iPhone-and-free-food spending to make the life of Yahoos better (and on parity with the rest of the digital sector).

To be fair, given the past two CEOs, anyone who did not come in and kick the employees where it counts was going to get some claps.

Mayer’s goals are “simple,” she says, “to execute fast, attract the best talent and make Yahoo the best place to work.”

She says she has assembled a stellar world class exec team to accomplish that.

2:11 pm: Now we get to meet one of that team and a Yahoo newbie — CFO Ken Goldman (pictured here). It’s his first day.

He repeats the results that Yahoo has already put in its press release, which is why I usually zone out here and focus on superficial stuff.

Like how much he sounds like former and ousted Yahoo CEO Scott Thompson. Eek!

Goldman touts Yahoo’s recent Alibaba Group deal in China (done not by Goldman, but by outgoing — jacked by Mayer, really — CFO Tim Morse) and notes a $765 million credit facility that Yahoo apparently got this month.

That’s more dough to add to Mayer’s ever-growing pile to spend on fixing Yahoo.

2:23 pm: Mayer is back — Goldman is nice enough, but everyone wants to hear from the former Google wunderkind.

She makes an obvious statement: Yahoo has to “grow at the same pace as the market we are in.” Yep. Yahoo’s growth has been practically non-existent, while the industry has seen robust increases for years.

Mayer is now hitting all the high points on what needs to be fixed.

Search, communications, a desperate need to invest in mobile. “Our top priority is a focused, coherent” mobile strategy, she says. It’s everybody and their mother’s top priority in the Internet space, but it’s gotta be said.

So Mayer says it again: “Yahoo will have to be a predominantly mobile company.”

She also name-checks “delighting users,” improving advertising and personalization.

2:27 pm: She also underscores that Yahoo will now hold onto its ad tech business.

“No one wants Yahoo to grow more than the people who work here,” says Mayer, who says she is going back to Yahoo’s roots. “We believe Yahoo’s best days lie ahead … and we intend to win.”

It sounds very good, but Mayer has been relatively unspecific overall.

Now to Q&A to see if she will drill down more.

2:30 pm: The first question is about Mayer’s vision as compared to others.

Apparently, it does not mean a “pivot” into different and new businesses. It does mean improving what Yahoo has done well.

“I don’t think this is a situation where there’s a giant pivot and we go into a completely different business,” Mayer says flatly. In other words, no string of Yahoo diners in the offing.

In addition, Mayer says that Yahoo occupies a unique spot that does not put it into “channel conflict” with other rivals and, presumably, can be a better partners.

Also asked about search versus display, she’ll take both, but found display “more compelling.”

The next question is about international markets and the local ones.

Growth, says Mayer, although Yahoo will be narrowing the offerings to be more compelling.

She refers to the recent closing of Yahoo operations in Korea. “We had a very hard time finding a growth story moving forward,” says Mayer.

As to local, which Mayer worked on at Google right before she left, Yahoo’s efforts are merely “good” and it’s not slated for investment going forward.

The next question is about metrics to judge progress. Yahoo left out user numbers it has usually provided in the past and Mayer is not giving up any data now either.

Instead, she is going to rely on internal data and not use third-party data any longer. (It makes some sense since the numbers have been not so pretty over time.)

2:37 pm: Mayer did not want to go into acquisition strategy, which came in a question about its giant pile of dough.

No billion-dollar buys for her, she claims, so cancel that Tesla order for Foursquare, Dennis Crowley!

Mayer noted that most acquisitions will be smaller scale and under $100 million. She noted she had done about 20 of those in her career at Google.

A question about Microsoft.

While there has been “disappointment,” Mayer says the goal is to work with the software giant. In other words, she’s not calling her old pals at Google quite yet (she hasn’t yet, in fact).

The next question is about mobile, with Mayer noting once again that the company has to be primarily mobile-focused going forward.

She’s going to hire as many mobile peeps as possible, especially via smaller-scale acquisitions.

2:44 pm: Goldman gets a little awkward in noting that his young-adult kids think Yahoo is all happening. Hmm, I suppose since he comes from the deservedly defunct Excite@Home and the successful but security-dull Fortinet, that makes sense.

In fact, getting back the young folks is one of Mayer’s top challenges.

A very good question — these are all good ones on the call — is how Yahoo can compete without a mobile operating system, such as Google Android and Amazon Kindle and Apple iOS.

Mayer notes that Yahoo has compelling content that others do not.

Another question on search and, specifically, on mobile search.

Mayer is unspecific, except to note that Yahoo has the ability to be pertinent and competitive.

She is a little more clear on the issues with the Microsoft Bing search relationship. Mayer does know this stuff well, and it is clear there is some serious low-hanging fruit to be plucked by someone who knows what they are doing.

Mayer knows search, to be sure, so I am thinking she will make some bank here.

A question about “overmonetizing” the Yahoo site — i.e. cluttering it up with icky ad units that drive consumers nuts.

Mayer notes that cutbacks in ads to improve user experience will only be done to increase traffic, which is a dicey proposition as it can also kill revenue.

A question about content and where that us going.

Mayer touts the Olympics programming — hat tip to former interim CEO Ross Levinsohn — as something unique to Yahoo. Interestingly, the media folks at Yahoo are still wary of pro-engineering Mayer.

2:55 pm: Another question about her interest in content and investment focus in ad tech.

“I am very product focused,” says Mayer, who uses the term “low latency,” a term that no media person ever would use as a hallmark of success.

She is much more comfy talking tech and that’s an area she knows better. Still, she says little about possible investments.

Mayer is then asked about goals for growth at Yahoo. She does not just want to grow at industry rate, but beyond that! But she’ll take industry rate for now (actually, that would be a huge accomplishment).

Goldman says little on the stock buyback, using the Alibaba dough, except they are buying.

3:01 pm: There are a lot of questions today for Mayer — which is no surprise — but now they are beginning to repeat.

(Plus, I have LOLcat’s Ben Huh waiting for me in the ATD Global HQ lobby — and you all know how I feel about them cats!)

Ah, the last question: It’s about data and personalization and what’s been lacking at Yahoo in not taking advantage about the pile of data it has about .

Yes, that should happen and it will under the regime of Marissa Mayer.

Mayer ends by noting, “It’s time for Yahoo to execute and bring our results back to growth.”

So it is written, so it shall be done.

Later today, new Yahoo CEO and latest savior Marissa Mayer is expected to debut in her first major turn as a public company CEO, as the company reports its third-quarter earnings.

Unfortunately, her initial script recounting the last three months is likely to be rather lackluster, with Wall Street anticipating yet another nothing-to-write-home-about financial performance from the Silicon Valley Internet giant.

Investors are expecting $1.08 billion in revenue and 25 cents in net income per share in a report that is likely to show more of the same kind of weakness Yahoo has had for far too long. The main reasons this time: Worrisome growth in search and display advertising, especially compared to robust worldwide trends.

Such concerns have kept Yahoo’s stock pretty much flatlined at about $16 a share since she arrived in July.

And that is not likely to change until Wall Street hears more specifics about Mayer’s future plans. Yahoo has previously said she would outline more about her direction on the call with investors later today, after the financial results are released.

Thus, it’s basically a wait-and-see attitude, until Mayer does that, and perhaps until after there is some actual traction.

As noted by Cantor Fitzgerald’s Youssef Squali:

“1) We’ve seen this movie before (this new CEO is the fifth in as many years) and 2) it will take some time before any of the yet-to-be-announced changes yield any meaningful P&L results. Until then, we see Yahoo! shares remain cheap with limited downside, but no clear catalyst to drive them higher short/medium-term.”

Among the highlights that investors hope will be covered by Mayer and also by new CFO Ken Goldman:

A cogent strategy to turbocharge the business, which — as ATD has reported many times — will focus on tech and product solutions; what acquisition arenas are in the pipeline; plans for new talent recruitment and perhaps layoffs of less-than-stellar employees at the bottom 20 percent of Yahoo; the status of talks to sell off its stake in Yahoo Japan; and, perhaps most of all, what are the plans to return cash to shareholders from its recent sale of its partial stake in China’s Alibaba Group.

That might already be in the works via stock buybacks that Yahoo has been engaged in, but it will be interesting to see if Mayer will provide more specifics.

Investors will also look for some details around mobile growth, and perhaps an update of how Yahoo is fixing its search monetization problems with its partner, Microsoft.

One development that some expect is that Mayer will drop future expectations, in a classic take-out-the-trash move.

As J.P. Morgan’s Doug Anmuth noted:

“Similar to what AOL CEO Tim Armstrong did when he stepped in a few years ago, we believe Mayer is likely to remove low quality ad units and over-monetization throughout the site. Despite the near-term monetization impact, we think this would be a good thing, as it would improve the user experience and de-clutter the site. Additionally, we think it’s likely new management would simply want to start off with a low bar.”

And, if she makes it low enough, anything Mayer will do going forward is likely to look pretty good.

“While the near-term outlook on FB remains cloudy given the ongoing transition to mobile, we continue to believe the long-term opportunity is large,” Stern Agee analyst Arvind Bhatia wrote in a Friday morning research note.

The reason for the positive outlook? A few things. Stern Agee conducted a sample survey of 750 users, and found that around 63 percent of the respondents access the site once daily, with 43 percent hopping on multiple times a day. “Engagement remains healthy, particularly among the 18-29 year olds, and user experience remains relatively unchanged versus six months ago,” Bhatia wrote.

That’s kind of an old-hat bet; engagement is something Facebook has trumpeted for a while now. Now it’s about how to wield that massive, one-billion-strong user base. What new products are to come that can turn those eyeballs into dollars?

Well, there’s Gifts, the service Facebook launched last month that allows users to buy stuff for each other. Bhatia claims nearly half the folks surveyed were willing to buy gifts for their friends through Facebook — that’s not too shabby, considering Gifts is in a test period, and only available in the U.S.

Also potentially lucrative: Nearly half of those surveyed were willing to use a Facebook search engine were it to come about, a topic that Mark Zuckerberg touched upon at the TechCrunch Disrupt conference last month.

My hunch, however, is that Facebook’s supposed search function won’t be the traditional Google-esque experience we’re used to. I’d imagine it’s more about searching within Facebook, finding relevant items inside your social network, rather than from the Web at large. But even that brings the potential for more ads served, with more page results returned. In other words, perhaps more revenue on the horizon.

Bhatia’s report wasn’t all wine and roses. He doesn’t anticipate promoted posts — Facebook’s way to let users pay their way to the top of their friends’ feeds — to be a big moneymaker. Only 16 percent of those surveyed were interested in using the product.

That could be part of why Bhatia’s price target was lowered to $37, down from the $47 target set just days before the stock debuted on the Nasdaq. Or it could just be that the fervor for FB shares has died down since the IPO, and the stock is tanking as a result.

Shares of Facebook were trading at $19.54 on Friday afternoon, down about 1 percent from opening price.

Twitter is considering building its own video-hosting technology, according to sources. That means users could upload video directly via the service’s mobile apps, instead of using hosting services like yFrog, TwitVid and Vodpod.

That potential change would be in line with a number of tweaks the site has made to its applications throughout 2012. Until recently, Twitter also delegated photo hosting to third-party services; Twitter moved that hosting in-house with the most recent app updates.

Mind you, this doesn’t mean Twitter expects users to start using its homegrown solution for the bulk of the videos people share of the service. It still expects most people to post clips using links from sites like YouTube, Hulu and Vimeo.

People familiar with Twitter’s thinking say the switch would be a way of further refining Twitter’s consistency and user experience, better shaping how users encounter Twitter content. It’s Twitter’s theme over the past year. (Example: The LinkedIn situation from months ago.)

While these video services take some of the heavy lifting off of Twitter, they also create difficulties. For one, Twitter has no control over the changes others make to their products. Yet often, Twitter must deal with the fallout when these changes occur. So, say, a third-party Twitter developer screws something up for its users — those users don’t necessarily go to the developer with complaints, but instead take it directly to Twitter.

I’d imagine, too, that every time Twitter updates one of its clients, it is frustrating to configure the new version to work with a number of outside hosting services. Add in the fact that Twitter has clients across multiple operating systems, and it fast becomes a logistical headache.

It’s not only about tech problems, but creating better ways to make tweets richer. Over the past few months, Twitter has slowly, increasingly updated the product to be more media-friendly, with full photos, videos and snippets of news articles now viewable from within individual tweets themselves.

Owning that rich video experience has monetization upside. One source says building a more effective video player could be a way of better enhancing the company’s existing advertising products, namely the promoted suite.

Look at it this way: If a big brand buys a promoted tweet, the advertiser needs to make that tweet as compelling as possible to get their money’s worth. The better the tweet, the higher the likelihood of click-through or, at minimum, brand awareness. A simpler, more reliable way for partners to host their video makes for a better, media-rich stream. In theory, it’s good for both users and advertisers.

Who it’s not so good for: These third-party hosting services. Were Twitter to follow through with the plan, this would seriously dampen the number of video uploads these services would receive. Users could still upload video to these third-party services and then add the link in manually, but the loss of official Twitter app integration would sting.

As of today, it’s not a done deal; Folks inside the company are still hashing out whether to make the change. But if it were to come about, I’d expect it to come quietly in a future product update.

(Image courtesy of Juan Manuel Romo)

That data comes from comScore, via a new mobile measurement report: It says that throughout August, Instagram had an average of 7.3 million daily active users — or DAUs, in Facebook parlance. That tops of Twitter’s 6.9 million DAUs over the same period of time.

What’s more, the average Instagram user spent 257 minutes accessing the photo-sharing site via mobile device in August, the data claims, while the average Twitter user over the same period spent 170 minutes viewing.

This is the case despite the fact that Twitter had approximately 29 million unique U.S. smartphone-based visitors in August, while Instagram had just under 22 million (comScore measured usage across iOS, Android and BlackBerry OS devices that accessed both sites via native application as well as through the mobile Web browser). This stems from the roughly 110 million smartphone owners who live in the U.S.

So let’s parse this: While Twitter may have had a greater number of smartphone users visiting its site (via the mobile Web and via Twitter apps), Instagram’s users appear to be returning to the site on a more frequent basis, and spending longer on the site each time they return.

Facebook declined to comment on the data. A Twitter spokesperson did not respond to a request for comment.

For a number of reasons, this is a pretty big deal. That the barely-two-year-old Instagram could rocket up in user engagement and retention in such a short amount of time, eventually surpassing Twitter in the process, speaks to the sheer momentum of the photo-sharing product.

Above all else, it speaks to the ongoing mobile issues of Facebook, now the parent company of Instagram. The massive shift in user traffic to mobile devices is a real thing, and Facebook seems to now hold an asset in the highly popular Instagram. The trick now, however, is to figure out a way to effectively monetize Instagram and the Facebook mobile experience.

Twitter, with its own ad product suite of promoted and paid tweets, seems to have cracked this. The company trumpets its ad business as already lucrative in the two years since its inception, though it has not provided any hard revenue projections to back this up. Current eMarketer projections for Twitter’s 2012 mobile ad revenue, however, put the start-up’s ad products near the top of the heap; eMarketer projects that Twitter will rake in close to $130 million in mobile ad revenue in 2012, nearly doubling that of projections for Facebook, which sit at around $72 million.

And Twitter ascribes most of this success to the mobile nature of the company’s core product. As of June 7, 60 percent of Twitter’s active users access the service via a mobile device. Twitter says the inherently mobile nature of Twitter increases overall engagement between users and tweets, making it more likely for users to click through on its ad products.

Now the pressure is on Facebook to create mobile advertising products that effectively utilize what seems to be Instagram’s key strengths, according to comScore: Bringing users back more often on a daily basis, and keeping them engaged for a longer period of time compared to Twitter.

We should note that until as recently as this summer, comScore did not provide a detailed information report on mobile metrics. Only in May did comScore first launch its Mobile Metrix 2.0 measurement product. It is not clear whether comScore’s numbers will continue to reflect these trends in Instagram and Twitter use. Also of note is that comScore’s data only measured activity from users age 18 and older, which no doubt cuts out a broad swath of minors who use both services.

To some degree, it makes sense that users spend more minutes engaged with Instagram than Twitter. Instagram’s never-ending flow of content is composed entirely of photos, with each picture requiring some degree of pause to take in. Twitter’s stream, on the other hand, is primarily composed of text-based messages, interspersed with some embedded photos, videos and links out to other Web sites. In a way, Twitter is designed to make it easier for users to move speedily through the stream, stopping on text or pictures as often or as little as they like.

Twitter has been trying to change this in recent months, however, with the introduction of products like Twitter Cards, a proprietary technology that allows outside content publishers to preview off-site content within tweets themselves, making Twitter as a whole more visually stimulating and, above all else, engaging.

An aside: It’s likely that Twitter could have achieved this richer, more visually oriented look if it had tried to buy Instagram. And, indeed, Twitter did try, yet failed to beat Mark Zuckerberg’s billion dollar offer. Must sting a bit to see the app that got away now flourish in the hands of your greatest competitor. (I know it smarts for Jack Dorsey, who hasn’t used the service since.)

But that battle is over. Now it’s up to Facebook to turn its darling new mobile engagement asset into a moneymaker. And as shareholders wait for a return on their Facebook investment, the clock is ticking.

Well, it wasn’t as tasty as free food this week at Yahoo, but in her second official all-hands meeting with employees — now reportedly called “Friday FYI” — new CEO Marissa Mayer rolled out another new Google-inspired Q&A tool to get the company talking about what matters.

The system allows anyone at the Silicon Valley Internet giant to post questions, ideas or suggestions on a variety of topics, which can then be voted up and down.

Actually, it’s been in use internally at — you guessed it — Google for some time, and is even available to the general public in a product called Google Moderator. Mayer has been importing a lot of corporate practices from the search giant where she worked for her entire career — from free food to better swag to these weekly confabs to, now, its method of hearing from the staff.

While Yahoo previously used its Messenger product to garner questions for its less-regular all-hands meetings, this is apparently a new interactive tool built by the company’s engineers (and not using Google’s free APIs, as far as I can tell).

It seems to be working fine, and there were a number of questions that bubbled up.

That included one about Mayer’s thoughts on her current executive team — which is still largely inherited from a series of previous administrations, despite some departures recently — and also how her regime will hold them accountable.

Algorithmic accountability among Yahoo execs? Things have changed!

Even better, declared the questioner of that particular query, to whoops from the audience: “I want an honest answer!”

But Mayer was diplomatic, only saying she was “pleasantly surprised” by the top execs. She also noted that the management would have quarterly goals that are transparent to the whole company. (I won’t say they do that at Google, but — ahem — they do that at Google.)

Mayer went through a number of questions in a precise and cut-the-mustard manner that employees seem to be enjoying, overall.

One very voted-up question was about leaks to the media, in particular to this Web site, and whether a board mole hunt has been successful (obviously not). Also, of course, what she was going to do about the situation.

Apparently, Mayer said she won’t be tracking down leakers, and that this new openness will solve the problem.

Good idea, but all that lovely transparency also needs some pretty good products if it’s going to work.

And product focus most definitely appears to be the path now. Mayer also showed off the new Yahoo Mail — which has been under revamp for a while, and was started under former Chief Product Officer Blake Irving — with some good response from Yahoos (last week, it was a look-see at its recent iteration of its IntoNow video offering).

There are other interface changes that have been in the works too, likely under the direction of Tim Parsey, Yahoo’s head designer, who also came on under Irving.

In fact, a lot of what Irving had pushed, including keeping advertising technology in-house and also maintaining control of key monetization engines, is the likeliest path going forward. The ad tech outsourcing deals, pushed by the interim CEO and his strategy head Jim Heckman, are apparently gone (and so are Levinsohn and now Heckman).

Also of interest to many at the company is the increased involvement of co-founder David Filo, who has become much less quiet under Mayer. I’d expect him to report directly to her — he’s actually been reporting for years to a variety of product and tech execs, despite owning more than six percent of Yahoo.

Thus, here’s my question for the new Q&A system for next week: So, when’s Jerry Yang showing back up?

Upon its reception, most of the public attention focused on a single passage, which stated that Twitter will soon introduce stricter guidelines to its developer partners in the coming weeks, limiting the ways in which outsiders will be able to use Twitter’s rich, ceaseless stream of data.

This was a big deal. Countless numbers of smaller start-ups rely on access to Twitter’s public-facing feed, using the tweets in their own businesses for any number of reasons. If the terms of access were to be altered significantly, it could impact the livelihoods of thousands. The company didn’t elaborate on what exactly those guidelines would be, and has said little else since. The key takeaway echoed in one repeated word: Consistency. Twitter’s future plans strove for consistency across the platform.

Naturally, Twitter developers across the Web proceeded to freak out. Of the many third-party app developers I’ve spoken to who have massively popular apps that depend on Twitter, all of them have told me they have received no guidance from Twitter beyond Sippey’s original post.

While members of the press scramble to cover Twitter’s most recent dustup involving the censorship of a reporter, speculation in the developer community continues to run rampant, and many accuse Twitter of being unnecessarily opaque.

But amid the confusion of the past month, nearly all have overlooked the section of Sippey’s post which holds the key to Twitter’s future: Cards. Twitter’s new Cards technology allows third-party developers to create richer, more compelling — and, above all, visually consistent — content inside of Twitter itself.

Therein lies Twitter’s goal: A rich, consistent Twitter experience for every user. When the hammer drops and Twitter changes its guidelines, those apps that can’t deliver this consistency will no longer be able to integrate with Twitter. The most likely candidates to go first, according to multiple sources, fall into two camps: Third-party-client apps which essentially reduplicate the Twitter stream — such as Tweetbot, Echofon and Osfoora — and news reader apps like Flipboard, which re-renders Twitter data to create a different visual experience of a tweet entirely.

The answer lies in the cards.

Cards on the Table

The mandate to crack down on developers comes straight from Dick Costolo — no doubt feeling the pressure of being the company’s third CEO in almost as many years — who is charged with the task of making profitable a company backed by hundreds of millions in venture capital and valued near $8 billion (see Googler Hunter Walk’s excellent post for more on this). Right now, Cards are the long-term bet in continuing to bolster monetization efforts.

First, let’s back up a bit. What are Twitter Cards, exactly?

In effect, they are the technology behind expanded, multimedia-rich tweets. With the addition of a few lines of code, publishers, brands and developers can create better tweets showcasing their content inside of the Twitter stream. For example, when sites like AllThingsD and the New York Times tweet a link to a story, a “summary” Card shows a fancier version, like so:

Developers can also push out media-based tweets, which include full photos and video that show up inside Twitter’s stream.

Though any developer may apply to use Cards, currently only major publishers — like the New York Times, the Huffington Post, CNET and others — big brands like Nike and Nascar, and high-profile media apps like Instagram and YouTube are able to take advantage of it. Twitter is restricting access initially, working with select partners on a slow, cautious rollout.

Here’s where it gets tricky. Right now, it rests on these developers’ shoulders to make their Card-enabled tweets work across official Twitter clients: Twitter.com, the Twitter Android and iOS apps, and Twitter’s mobile Web site.

The problem is, there are far more clients than the official ones: Tweetbot, Echofon and Osfoora are all popular alternatives, among many others. And right now, the tweets that use Twitter’s shiny new Card technology don’t show up in their rich new form inside of these third-party clients.

For Twitter, this is awful: The company needs its new, media-rich tweets to appear the same to everyone, not just to those using the official Twitter apps.

This could mean death for those third-party clients. According to multiple sources, when Twitter introduces the new set of API guidelines, the days of these apps are likely numbered.

That also goes for many news aggregation apps as well, according to my sources, with the very popular Flipboard being the most notable among them. The writing has been on the wall for Flipboard for some time — enough that Mike McCue, the Flipboard CEO who also occupied a seat on Twitter’s board, seemed likely to relinquish his board seat, back when Kara Swisher first reported it in May.

Multiple sources confirmed to me recently that McCue is indeed no longer a Twitter board member.

Quality Control

Here comes the burning question: Why are Cards and visual consistency so important to Twitter? Is Twitter’s obsession with good design so extreme that it is willing to risk alienating its developer community at large?

In three words: No, but sorta. This section from Sippey’s post gives us a further hint at the “why”:

“Twitter cards are an important step toward where we are heading with our platform, which involves creating new opportunities to build engaging experiences into Twitter. That is, we want developers to be able to build applications that run within Tweets.” (emphasis mine)

Building apps to run inside a platform. Sound like any other major social companies you’ve heard of?

Yes, it does: Cards are Twitter’s own version of a Facebook-like Open Graph. Just as developers’ apps look, feel and function better when integrated into Facebook’s Open Graph, third-party developers can use the Twitter Cards technology to build apps into Twitter. As Sippey alludes, pictures and media are just the beginning: Twitter wants developers to create all kinds of apps — it just wants them to do it on Twitter’s terms, inside Twitter’s visual constraints.

Indeed, while Sippey’s post read as a warning shot — which, to some degree, it certainly was — it is also a call to arms for developers to take to Twitter’s platform in a different way than they have before. Twitter even plans to amp up its efforts in bolstering its developer ranks, listing multiple developer evangelist and advocate positions on its recruiting site.

The direction in which tweets are evolving is a deviation from Twitter’s modus operandi. The company has prided its service on its simplicity: Stripped-down, text-only messages. And, for years, Twitter has resisted doing anything that would complicate the simplistic appeal. For the company to give an about-face and turn toward media is a major sea change — and if Twitter can’t be as simple as it always has been, staying consistent is the next best sort of insurance.

And if these other unofficial clients can’t (or won’t) use Cards, that cuts Twitter’s plan off at the knees.

Promote This

Looking good has its advantages: Better-looking tweets will send more traffic back to publishers and more eyeballs to brands, while Twitter users get the benefit of a better in-stream experience.

But that’s not all Twitter gains. Rich tweets give brands more bang for their buck when buying Twitter ads. Take Promoted Tweets, one of Twitter’s top ad products, as an example: A regular Promoted Tweet gets pinned within users’ streams, where users may or may not click on it. But if you compare that with a Promoted Tweet that includes an embedded, custom-made app or video clip inside of it, my guess is you’ll see engagement levels rise in the latter case. Give advertisers the chance to stick more bells and whistles into their ad, and it’s an easier sell.

Right now, Twitter is taking a conservative rollout approach, partnering with a handful of high-profile developers to create a fancy first round of well-produced tweets. It’s akin to mobile app Path’s recent approach with its Nike FuelBand integration — Path worked with one partner to produce one well-integrated partner experience within the Path app.

And herein lies the advantage of reining in the platform: The less room Twitter gives developers to play with the API willy-nilly, the easier it is for Twitter to create better experiences within Twitter.

In other words, enough building innovation out — it’s time to innovate in.

Choices

The road ahead is foggy. And it is unclear whether Twitter’s API changes to come will immediately ax a wide swath of apps completely, or whether developers will be able to adjust to Twitter’s new rules of the road. Perhaps if Twitter can give developers the proper guidance, it won’t be a third-party-app bloodbath.

I’ve been told by a few sources that even Twitter is still figuring this out. Right now, a source says, the company is facing a series of choices as it stares down the path it has chosen.

Some of those choices are easy: Ending the LinkedIn partnership was a no-brainer, sources say, as Twitter received little traffic back from those tweets syndicated in LinkedIn’s stream. (It should have ended much earlier, I’m told, but the occasional quick phone call from LinkedIn CEO Jeff Weiner had a way of convincing Dick Costolo to keep the partnership in place.)

Instagram, which will most likely soon become property of Facebook (after the FTC gives the okay), was also an easy choice, sources say. Facebook is Twitter’s competition for ad sales, plain and simple. Coupled with the social graph, any access Facebook has to Twitter’s interest graph could make Facebook’s ad targeting exponentially better, and therefore far more lucrative for advertisers. (It also probably didn’t hurt that Facebook set the precedent of cutting off its competitors when it did the exact same thing to Twitter years ago.)

Other decisions — like cracking down on developers and third-party apps who until now have enjoyed positive relationships with Twitter — most likely won’t be so easy for the company to make.

But Twitter has proven tough thus far, and is most likely to continue taking flak to see its plans through.

Meanwhile, Twitter runs the risk of watching developers depart the platform, perhaps seeking refuge in alternatives like Facebook or — dare I say it — Google+. There’s even a new kid on the block that aims to do it a better way, opting to build a real-time platform like Twitter, wholly unsupported by ads. Dalton Caldwell, a Silicon Valley familiar, has pitched App.net as a paid service for app developers who don’t want the pressure of advertisers bearing down on the network over time. It is ambitious, and idealistic in the extreme (perhaps, many would say, to its own detriment).

Or, developers can continue to do what they’ve been doing: Watch, wait, and let the cards fall where they may.

Similar to Local Updates, Promoted Updates allow businesses to push out recommendations to potential customers, serving as advertisements to Foursquare users as they move throughout the world.

The updates appear based on factors like proximity, time of day and past places you’ve visited, Foursquare says, so that users will only be seeing the most relevant sorts of ads. So, for example, say you’re in SoMa around noon, and have a history of eating at sandwich joints. If a merchant like Caffe Centro (one of my lunch standbys) placed a promoted update message, you’d probably see it in your stream.

“We’re thinking of them as Google search ads for the real world,” product manager Noah Weiss told me in an interview. “But instead of a Google ad driving traffic to a site like BestBuy.com” — one of Foursquare’s initial launch partners — “we drive traffic to the actual Best Buy store.”

Promoted Updates only appear when a Foursquare user opens the Explore tab, essentially an in-app recommendation engine that suggests places of interest nearby, again tailored to your Foursquare history. That’s somewhat in line with the Google analogy; A search query requires intent, putting in a request, and being served a series of relevant suggestions by Google. That’s how Foursquare sees Explore, a way to express the intention to discover places of interest without knowing exactly what it is you’re seeking.

Just like Twitter and Facebook did with their respective “promoted” products, Foursquare aims to increase a merchant’s visibility through promoting it in the stream, that portion of the app which receives the most eyeballs. What’s more, updates also offer the ability to attach a message. Such a message could contain a deal or special promotion, a potential hook to getting more foot traffic in the door.

In a more grand sense, Promoted Updates are in line with Foursquare’s attempt to take seriously its monetization strategy. For some time, merchants have had access to this wealth of user check-in data — gender breakdown, visitation frequency and times of day, among other statistics — but until recently, they haven’t had the opportunity to put it to good use.

Now, after more than three years of collecting data, Foursquare will actually sell tools like Promoted Updates to businesses that wish to capitalize on the popular, 20-million-user-strong platform. Typically those tools have been found from third-party vendor companies, cutting Foursquare out of a potentially lucrative revenue stream.

For now, details are scant on just how lucrative it is for Foursquare. Chief Revenue Officer Steven Rosenblatt tells me each partner pays on a cost-per-action model, and each promotion lasts for several months, though he wouldn’t go into further detail.

The tool is currently in a pilot mode, launching with only a handful of about 20 or so partners including the Gap, Walgreens and Best Buy. After a few months of testing and feedback, the company will likely roll it out to more of its participating network of more than one million existing merchants.