The Yahoo board has approved a massive $1.1 billion all-cash deal to buy Tumblr.

It’s not clear when the official vote was taken, but sources close to the board said the acquisition was a foregone conclusion and was unanimously approved by the directors of Silicon Valley Internet giant.

The deal will likely be announced Monday morning, said numerous sources.

AllThingsD.com initially broke the story of the acquisition efforts and later followed up with details of the exact price and the board meeting to approve the transaction.

There were no other competing bids, despite reports, to snap up the New York-based social blogging service. That said, Tumblr had held some very preliminary discussions about various deals with Facebook, Google, Microsoft and also Twitter earlier this year.

As part of the Yahoo deal, Tumblr CEO David Karp — who will get a windfall of cash from the acquisition — will stay at Yahoo for four years at least and retain a lot of control over the service, much in the same way Instagram CEO Kevin Systrom does at Facebook. But, as there, Yahoo will undergird Tumblr’s nascent advertising business with its large and established infrastructure, said sources.

Yahoo had been mulling some kind of deal with Tumblr, from a strategic investment to an outright acquisition, for about six weeks. Sources said that Yahoo CEO Marissa Mayer had decided that buying the company was going to be “the stake in the ground of what her strategy is going forward for Yahoo.”

And that is to attract younger audiences with just the kind of user-generated content Tumblr has pioneered to impressive growth.

According to numerous sources, Mayer determined quickly in her research that the site was just the kind of property that Yahoo needed to make it both “cool” and relevant to new consumers.

Yahoo is looking to bolster its strong set of existing media offerings to appeal to a different demographic and also get into the social space via consumer-based software solutions that are both elegant and easy to use.

Tumblr’s mobile usage has also been strong, which also interested Mayer. While Tumblr started as a desktop-based service, its mobile offering has ramped up quickly in the last few years. ComScore says that a quarter of the service’s U.S. visitors now come from mobile devices.

At this price, it will be Mayer’s biggest acquisition so far. Since she became CEO last summer, Mayer has made only a series of small acquisitions of mobile startups at a low cost.

According to sources, the Tumblr brand will continue.

The deal, if consummated, will be a big win for investors. In a series of fundings since 2007, Tumblr has raised $125 million so far and is now at a reported valuation of $800 million. Investors include Spark Capital, Union Square Ventures, Sequoia Capital, Greylock Partners, Insight Venture Partners and the Chernin Group.

While Tumblr’s Karp has resisted various offers for the company over the years, Mayer spent a lot of time with him reassuring him that Yahoo could turbocharge his business. He has also been searching for a COO to help him build out the infrastructure of its business, especially its advertising one.

And as Peter Kafka and I previously wrote, Tumblr could certainly bring Yahoo a big, young audience. Its worldwide traffic was at 117 million visitors in April, according to comScore. On its home page, Tumblr claims it has 107.8 million blogs and 50.6 billion posts. U.S. desktop traffic to Tumblr was 37 million in April, close to LinkedIn and Twitter, although Twitter obviously has much more via mobile.

But figuring out how to make money from that is a task that the company has only recently started to tackle.

Like other recent Web startups that have seen rocketship growth — see: Twitter, Facebook — Tumblr resisted advertising for its formative years, and its user base seems particularly unwilling to accept standard banner ads. In addition, many industry observers think that Tumblr’s pages are packed with porn or other questionable content that would scare off advertisers.

But within the last year or so, Tumblr has started selling modestly sized “native ads” promoting brands’ Tumblr pages, on users’ “dashboards,” which has shown promise. Tumblr has said it had $13 million in revenue last year and sources said it could get up to $100 million this year.

Tumblr has been represented by Qatalyst Partners’ Frank Quattrone, while Yahoo’s Mayer, as well as M&A head Jackie Reses and CFO Ken Goldman, have been on the company’s side.

Interestingly, what got me first focused on Tumblr last week were Goldman’s comments at JP Morgan’s Global Technology conference last week, where he underscored the need for the aging Yahoo to attract more users from the coveted 18-to-24-years-old age bracket. Along with more marketing, he explicitly said Yahoo needed to be “cool again.”

“One of our challenges is we have had an aging demographic,” said Goldman at the Boston event. “Part of it is going to be just visibility again in making ourselves cool, which we got away from for a couple of years.”

Tumblr, apparently, fits the very expensive bill.

Earlier this week, Yahoo CFO Ken Goldman spoke at JP Morgan’s Global Technology conference and underscored the need for the aging Silicon Valley Internet giant to attract more users from the coveted 18-to-24-years-old age bracket. Along with more marketing, he explicitly said Yahoo needed to be “cool again.”

“One of our challenges is we have had an aging demographic,” said Goldman at the Boston event. “Part of it is going to be just visibility again in making ourselves cool, which we got away from for a couple of years.”

According to sources close to the situation, that could mean a strategic alliance and investment in or outright buy of perhaps the coolest Internet company of late: Tumblr.

Sources said the talks were serious, but any kind of deal — of course — could come to naught.

But it’s not the first time Yahoo CEO Marissa Mayer has been interested in the New York-based hipster blogging service. As an executive at Google, she had closely watched its fast growth, along with that of Foursquare. Since she took over at Yahoo, several sources said that she has met with its top execs, including founder and CEO David Karp.

But sources said that interest has gotten stronger more recently, coming at the same time as Tumblr has been stepping up its efforts to raise a large funding round that could value the New York company at $1 billion. In a series of fundings since 2007, Tumblr has raised $125 million so far, at a reported valuation of $800 million.

In the latest round, one source close to the situation said Tumblr was considering “strategic” investments, which would presumably be of the kind that Yahoo had tried and failed to do recently with France’s Dailymotion video service. Since then, Mayer and her team have looked at the ongoing deal to purchase Hulu that has many possible other bidders.

Tumblr is different from Dailymotion or Hulu, of course, in that it focuses heavily on user-generated content, largely text and photos, although there is an increasing use of video on the site.

But this puts it directly in Yahoo’s main wheelhouse, especially recent efforts to undergird its strong set of existing media offerings to appeal to a different audience and also get into the social space via consumer-based software solutions that are both elegant and easy to use.

“If you could pick a company that fits in with what Marissa Mayer has demonstrated in her career — aesthetics software technology and fast-growing — you could not land on a better choice,” said another source.

That said, Yahoo has been sticking to smaller acquisitions under Mayer’s regime, spending very little on a clutch of small mobile startups to up its game in the important sector. And at the same investment conference, Goldman also said additional M&A would continue to be smaller for Yahoo.

Still, any kind of deal with Tumblr could certainly bring Yahoo a big, young audience. Its worldwide traffic was at 117 million visitors in April, according to comScore. On its home page, Tumblr claims it has 107.8 million blogs and 50.6 billion posts. U.S. desktop traffic to Tumblr was 37 million in April, close to LinkedIn and Twitter, although Twitter obviously has much more via mobile.

But figuring out how to make money from that audience is a task that the company has only recently started to tackle.

Like other recent Web startups that have seen rocket ship growth — see: Twitter, Facebook — Tumblr resisted advertising for its formative years, and its user base seems particularly unwilling to accept standard banner ads. In addition, many industry observers think that Tumblr’s pages are packed with porn and/or other questionable content that would scare off advertisers.

But within the last year or so, Tumblr has started selling modestly sized “native ads” promoting brands’ Tumblr pages, on users’ “dashboards.” That’s the equivalent of running ads in a Facebook user’s News Feed or a Twitter user’s main feed.

Initial signs are promising. Tumblr told Forbes that it generated $13 million in revenue last year, and suggested it could do as much as $100 million this year; people close to the company say its momentum has continued this year.

In addition to figuring out its top-line business, Tumblr and its backers have also been spending a long time trying to figure out a managment structure. Even Karp’s strongest backers say that the 26-year-old needs help running the company, and for months they have been looking for a “Sheryl Sandberg”-style COO candidate.

“David is very charming, and clearly very very bright, and understands the product,” said an executive who talked to Tumblr about the role. But, “he’s incredibly confrontation averse, and there’s almost a ‘Game of Thrones’ palace feeling to the management team.”

Possibility of death by wildfire aside, sources said that the search has yielded two or three candidates that Tumblr is considering. It is a key hire since the company needs to build out an extensive infrastructure quickly, given its sharp consumer growth, including fielding a more robust advertising team. Tumblr hired an experienced exec, Lee Brown, from Groupon last fall, who has been busy hiring more sales execs. Interesting aside: Brown was a longtime Yahoo ad exec.

But building out the needed structure at the company is a long slog, and Tumblr might be seeking more help one way or another.

Yahoo declined comment and Tumblr has not gotten back to us as yet.

As has been widely reported and according to sources we have confirmed it with, Facebook is indeed in serious talks to buy Waze for $1 billion, the social traffic application that helps drivers navigate the road with crowdsourced traffic information.

While no deal has been struck as yet, these sources said, the discussions are advanced and closely resemble the social networking giant’s lightning-fast purchase of Instagram a year ago.

The similarities do not stop there. The price is the same and is a mix of cash and stock, said sources. In addition, as Facebook has done with Instagram, Waze will be allowed to operate relatively independently within the company if the deal is struck.

Facebook CEO Mark Zuckerberg recently praised the purchase of Instagram, which has grown to more than 100 million active users in a short time span. More importantly, it has been a critical perceptual part of Facebook’s effort to distinguish itself in the mobile space and has added a highly engaged audience to its audience.

The news of the Waze acquisition interest by Facebook was first reported by Israel’s Calcalist. The Israeli-based company has been the subject of numerous rumors of acquisition, including by Apple and Google, neither of which seems to have panned out.

Not so here and the main question now: Why would Facebook buy a mapping company?

It’s not that much of a surprise, actually. The digital industry has moved its focus to mobile over the past few years, as users are increasingly accessing sites through their smartphones instead of desktop sites. As of Facebook’s last earnings, more than 750 million people visit Facebook via mobile device on a monthly basis.

After intense investor worry over its lack of mobile strategy caused a huge drop in its stock, Facebook quickly shifted to the idea that it needed to own the mobile experience. First, as has been reported by AllThingsD.com previously, that was going to be a proper phone. Then, abandoning that effort, the company mulled creating its own operating system. Finally, it settled on Home, essentially a Facebook-ified version of the Google Android mobile operating system that can be downloaded to run on many Android-enabled phones.

Clearly, Facebook has wanted to own the mobile experience without doing the intense work and uphill fighting of creating its own hardware or building an operating system from the ground up, both of which would struggle for marketshare, just like RIM’s BlackBerry or Microsoft’s Windows Phone.

But as we’ve seen with Google and, most recently, with Apple’s iPhone, if you want to truly own a mobile operating system, you’ve got to own the maps.

Why? Well, it’s an endless treasure trove of continuously updated data directly from your users, including their locations, their habits, their preferred businesses and their travel destinations. It’s why Apple snipped off Google Maps and switched its users over to its own mapping product, despite some problems with its software. And it’s why Google spent the past decade building up its maps to lead the industry.

To avoid getting left out, Waze, in particular, makes a certain amount of sense for a Facebook buy. For years, Facebook has yammered on and on about “social from the ground up” — you can’t just build apps and services and then slap a social layer on top and then just call them social. The network, Facebook argues, doesn’t work like that.

Waze is a perfect example of social from the ground up. From the beginning, the app has relied on not only the passive input of traffic and location data from its users, but the active contribution of data like accidents, police traps and more.

In other words, Waze is based on social contributions for the greater good of others using the app. Talk about something Facebook would be into, even at the high cost of one billion dollars.

But that’s something the company is used to pulling the trigger on. It outbid Twitter for Instagram almost one year ago, in a deal that was closed over the course of a weekend. While Zuckerberg had spent a lot of time creating a relationship with its co-founder Kevin Systrom, in that instance he showed the inclination and the power to grab for what he wants and very quickly.

Facebook declined to comment, with a spokesperson saying: “We don’t comment on rumors and speculation.”

Billion dollar idea: An app that sends you a text when the light turns green.

– Damien Fahey, via Twitter

Yahoo reported its fourth-quarter earnings today, with earnings higher than expected, but with a continued flattish revenue.

The Silicon Valley Internet giant aid its non-GAAP net profits were 32 cents a share, compared to 25 cents in the same period a year ago. But GAAP net earnings per diluted share were 23 cents in the fourth quarter of 2012, compared to 24 cents last year.

Shares jumped just above four percent in after-hours trading to above $21 a share, given Wall Street analysts were estimating a profit of 27 cents per share in Q4.

Net revenue, without traffic acquisition costs, was expected to be $1.21 billion. It was $1.22 billion and which is essentially flat from a year ago’s $1.17 billion. Search revenue was up nicely, while display sales declined.

Overall the results showed a non-sinking but none-too-powerful ship and not very impressive given almost every other Internet company grew revenue significantly in comparison. For example, Google reported last week that core revenue was up 21 percent in the quarter.

Still, up is up, even if it is not up that much. “I’m proud of Yahoo!’s 2012 and fourth quarter results. In 2012, Yahoo! exhibited revenue growth for the first time in 4 years, with revenue up 2 percent year-over-year,” said Yahoo CEO Marissa Mayer in a statement.

In other words, she’ll take two percent, given the nearly persistent revenue declines of recent years. It is progress, of course, even if investors are looking for more robust increases ahead.

Also of note: Yahoo said it repurchased 79.6 million shares at an average price of $18.24 for $1.45 billion in the fourth quarter, which most definitely was one of the reasons for its recent stock run-up.

Yahoo did not release information on consumer engagement and traffic in the Q4 report, which it had done until Mayer took over. As AllThingsD.com had previously reported, most metrics in the quarter were down significantly over last year.

The fourth quarter was the first that was entirely under the new regime of Mayer, who arrive at Yahoo in July from Google.

She’s gotten a big break from Wall Street, which has sent Yahoo’s stock up in recent months on the hopes of her turnaround plans.

Last week, Mayer said the long-suffering Silicon Valley giant would be returning “back to its roots,” as part of an effort to finally turn it around. It’s actually part of a bigger plan which AllThingsD.com had reported on previously, to focus Yahoo on being a center of content discovery on the Web, across multiple devices, with wide-ranging and “very friendly” partnerships with other companies.

More to come at the 2 pm PT, conference call with Mayer, which I will be liveblogging as usual.

Until then, here’s the official press release and deck from Yahoo:

YHOO_News_2013_1_28_General

Q4’12_Earnings_Presentation.vsFINAL

This week in Las Vegas, the new management team running Yahoo — including CEO Marissa Mayer — is at International CES to schmooze with big advertisers and convince them that Yahoo is the place to put large chunks of their marketing budgets.

One of the longtime selling points of the company is the sheer size of its audience, especially for the key money-making parts of the site — the homepage, Yahoo Mail and search.

But private stats from comScore show that those three areas have continued their longtime decline over the last year, in some cases dropping significantly. In November and December, for example, compared to the same two months a year ago, U.S. search was down 28 percent and 24 percent respectively, while mail was down 16 percent and 12 percent.

This matters a great deal, since the troika of homepage, mail and search have been the critical driver of the Yahoo value ecosystem for advertisers.

The impact of those drops is felt all over Yahoo, whose music, movie, games and travel site have also seen massive drop-offs in traffic year over year in those same months.

Stopping the decline is critical for Yahoo, since Mayer herself has underscored the need for size in her pushing for new businesses at Yahoo that are 100 million users in size and/or have revenue prospects of at least $100 million.

While this is a lofty vision, the reality of traffic falloffs on key properties is a vexing issue, especially since they remain its main source of revenue and also an important element in launching future products Mayer is promising will turbocharge the company.

It’s not that Yahoo is not huge, especially compared to most sites on the Web.

As one of the top Internet brands, according to a recent Nielsen report, the average number of total monthly unique visitors for the longtime Silicon Valley Internet company in 2012 was 141.6 million, No. 3 behind Google and Facebook in the U.S. market. Similar rankings were reported by comScore, which placed Yahoo at the No. 2 spot after Google, with 171.4 million monthly visitors in November.

But, for many years, traffic to those important consumer destinations of Yahoo has been on a clear and unstopping decline, statistics (usually from comScore) that the company nonetheless always dutifully puts in its earnings slides — see below — for investors to get some idea of the major and vexing issues facing the company.

That was suddenly ended in the last quarter with the engagement slide removed from Yahoo’s public deck entirely. Not all companies include such stats, so when I inquired as to why the company had made the change, Yahoo PR never returned my phone call.

But it’s not hard to guess the reason for the shift — the numbers were not good and they called more attention to Yahoo’s glaring challenge, which is getting users reengaged with its products by creating what Mayer has dubbed several times “delightful” experiences.

According to numerous sources, that has also been the case within the company too, with the new regime restricting an internal transparency initiative pushed by former Chief Product Officer Blake Irving that shared product performance numbers with the top 100 leaders at Yahoo.

And while it’s an interesting strategic choice, several sources inside the company this week urged me to get ahold of increasingly worrisome numbers from comScore — available to its private clients — comparing November 2011 to November 2012 and also December 2011 to December 2012 at home and work in the U.S.

So I did, getting the same stats from numerous sources — numbers that a spokesman for comScore confirmed were correct.

And, as promised, they are worrisome indeed.

In November 2012, compared to November 2011, the monthly unique visitors to the homepage declined 17 percent to 91.8 million from 110.9 million; Yahoo Mail dropped 16 percent (from 92 million to 77.7 million); and Yahoo search dropped 28 percent (from 93.3 million to 66.9 million).

Also off significantly for all three areas, often by one-third, were a plethora of other stats: Percentage of reach, total minutes, total page views, total visits and more.

One of the only bright spots for Yahoo was the relatively small Flickr sites, which were up 37 percent — 26.7 million versus 19.4 million — in unique monthly visitors year over year. The photo-sharing site — which has been getting a much-needed refresh — was also up in all other stats.

But Flickr — which Mayer (pictured here) has laudably touted and supported after years of inexplicable neglect — is not a money-maker for Yahoo, even if its return does burnish the company’s tech and innovation cred.

In December 2011 to December 2012, the homepage was more stable, gaining four percent in monthly uniques from 109.4 million to 114.2 million, but with other key stats both rising and falling. Total visits were up 14 percent, for example, while average minutes per visit was down 13.6 percent.

But the trouble for mail or search continued, off 12 percent (89.9 million to 78.7 million) and 24 percent (88.7 million to 67.4 million) respectively in monthly uniques, with similarly major declines in all other stats.

Mail recently got a refresh too under Mayer, despite some recent security glitches, so new stats will show if that will help stem the declines. Search is another story all together, with Yahoo in what can only be described as a dysfunctional partnership with Microsoft that numerous sources tell me Mayer is seeking to end.

The homepage, too, is undergoing a redo, with a design that has a decidedly more mobile and social feel, and pushing an ethos of Yahoo becoming a hub for content discovery. It is hoped the new look will boost traffic relatively quickly from its current downward trajectory.

To be fair, there can be lots and lots of reasons for these declines, although most of Yahoo’s competitors are, at worse, seeing a flattening of growth and not outright declines.

And sometimes Internet sites complain that services like comScore undercount, although Yahoo had previously used the firm in its public documents. More to the point, as multiple sources within the company note, the stats are directionally correct in that they closely track with internal Yahoo numbers.

Which is to say, traffic is going down rather than growing. That is clearly why Mayer has loudly stressed mobile since arriving at Yahoo, an area not included in these numbers that many sources said has strong growth to about 70 million monthly unique visitors via its apps and mobile-enabled Web offerings.

But unlike the homepage, mail and search — which push and pull traffic all over Yahoo and are responsible for most of its current monetization — mobile also makes very little money now. And Yahoo — unlike Facebook, which recently did — does not break out mobile results.

So, it will be interesting to see if the company does so when it reports fourth-quarter earnings on January 28 and also if it says anything about continued traffic declines of its traditional Web business in the period and the impact on revenue.

Still, there are lots of ways to counter declining or flat revenues, even with declining traffic — via cost cuts, efficiencies, charging more and selling assets (as Yahoo did in the last quarter). And Yahoo has ably managed to keep its operating margins growing over the years, despite both the declines in traffic and moribund growth in its revenue.

But the real and only fix is the drastic fix to existing tentpoles Yahoo has and the creation or acquisition of products that excite consumers and, therefore, advertisers.

It’s not an easy thing, of course, as well-known venture capitalist Ben Horowitz recently wrote in his blog about the need to focus on products over building and improving culture — one of Mayer’s other big initiatives at Yahoo.

Wrote Horowitz in what I consider one of the clearest articulations of what it takes to win for startups, as well as big companies like Yahoo:

“The primary thing that any technology startup must do is build a product that’s at least 10 times better at doing something than the current prevailing way of doing that thing. Two or three times better will not be good enough to get people to switch to the new thing fast enough or in large enough volume to matter. The second thing that any technology startup must do is to take the market. If it’s possible to do something 10X better, it’s also possible that you won’t be the only company to figure that out. Therefore, you must take the market before somebody else does.”

If you want to take a gander, here are some more of those old Yahoo quarterly engagement slides, which were recently eliminated from its presentations:

(Note: I reached out to Yahoo’s outside PR firm — since they do respond to queries — and also some company execs to get a comment on this story, but so far there has been none.)

After it set a single-day ticket sales record on Christmas Day, Fandango said that 2012 was the best performing year in its 12-year history for ticket sales, as well as for traffic and app download results.

A press release by the Comcast-owned online movie ticketing and information site said sales were up 57 percent in the year, while monthly visitors rose 34 percent to about 41 million in peak months, and there were 31 million app downloads.

Fandango, which is the online movie ticketing service for Yahoo Movies, AOL Moviefone and MSN Movies, also said that mobile sales rose 171 percent in the year, making up 30 percent of overall ticket sales.

For 2013, the company said it would increase both its reserved-seating options and paperless mobile ticketing, as well as launching two more original video series.

With all the hyped hullabaloo around just how mobile-icious we are this holiday season — yes, it’s up, but it is also a retailer-cooked trend that reporters grab onto amid the news drought of the Thanksgiving weekend — one of the many statistics spewed out by a variety of sources was rather interesting.

According to IBM, in a report titled “The iPad Factor”:

“The [Apple] iPad generated more traffic than any other tablet or smartphone, reaching nearly 10 percent of online shopping. This was followed by iPhone at 8.7 percent and [Google] Android 5.5 percent. The iPad dominated tablet traffic at 88.3 percent followed by the Barnes & Noble Nook at 3.1 percent, Amazon Kindle at 2.4 percent and the Samsung Galaxy at 1.8 percent.”

And, over at eBay and its PayPal unit — which spewed out all kinds of data on mobile transactions that showed volume was between two and three times greater, mostly on Apple devices — the company noted that one of its bestselling items on Black Friday was the iPad 2, selling 250 per hour from 12 am to 8 am PT.

That tracks on an earlier survey by Nielsen with 48 percent of U.S. children 6 to 12 years old asking for the iPad, followed by iPod touch (36 percent), iPad mini (36 percent) and iPhone (33 percent).

Presumably, which will be used to order more.

Here’s a lovely IBM chart explaining it all:

IBM Holiday Benchmark Infographic BF2012

In what has become an annual holiday tradition, those who keep track of these things have started in on touting just how digital the holiday shopper has become, whipping out all manner of buzzwords to do so.

Last year, it was Cyber Monday — this year, it’s turned out to be Mobile Thursday. What’s next? Social Network Saturday? Self-Driving Car Sunday? (We still have Black Friday, by the way, which is today.)

And, indeed, the Mobile Thursday phrase got some big laps around the track, with numerous online shopping surveys — coming out faster than you can buy that new tablet — using it in their flash reports yesterday and today.

This year’s anecdotal meme: Apple iPads go well with pumpkin pie.

What isn’t said so much is that it is still a very small number — though fast-growing — over the last few years, with overall sales reaching $500 million for Thursday, compared to about $1.2 billion on Monday, according to comScore.

Still, for now, no one seems to break out actual mobile sales figures, which are clearly still a fraction of the totals. But they are more than happy to tell you that people are certainly browsing on their mobile devices, which should come as a surprise to exactly no one who is tired of talking to the relatives about three hours into the day.

According to IBM’s Benchmark report, for example, online sales were up 17.4 percent over 2011 on Thanksgiving Day, noting that “big winners were retailers who connected customers with personalized deals across multiple screens including PCs, smartphones and tablets.”

Some stats from IBM about Thursday:

Mobile Traffic: The number of consumers using a mobile device to visit a retailer’s site reached 25.3 percent, up from 66.2 percent over 2011.

Mobile Shopping: The number of consumers using their mobile device to make a purchase increased to 18.3 percent, up 65.3 percent from 2011.

Mobile Email: Smartphone and tablet shoppers responded to email deals from retailers, with emails opened on mobile devices jumping 23 percent on Thanksgiving Day over 2011.

Couch Commerce: In the evening hours, consumers shifted from shopping through their smartphones at the dinner table to buying through their iPad on the couch. At the end of the day the iPad drove more retail traffic than any other device with traffic reaching 10.7 percent versus the iPhone at 9.1 percent and Android at 5.8 percent.

Social Shopping: Shoppers referred from Social Networks such as Facebook and Twitter increased in evening hours generating .63 percent of all online sales on Thanksgiving.

And today, Black Friday, IBM slightly upped those figures, noting that the iPhone was the preferred device to bring into a store to shop with — presumably irritating sales clerks everywhere.

Over at Fab, CEO Jason Goldberg was touting in a Betashop blog post that his mobile app sales were 40 percent of the retail site’s total for the day. It’s usually 33 percent, so it’s a small jump, which Goldberg attributed to a tweet by Apple promoting it. But how much did he sell? He’s not saying.

And eBay said it launched 20 mobile-only e-commerce promotions over its app, as did many other retailers.

Also, no surprise, the New York Times weighed in with the classic trend piece: “The Shrewd Shopper Carries a Smartphone.” Um, everyone carries a smartphone now, but it apparently gets more magical when you take it to Macy’s.

We’ll see if Mobile Thursday becomes Mobile Holiday Season, which would be a big deal — but it’s winning so far in the pundit stakes.

Until we get actual numbers, here’s a chart about the whole thing from eBay:

In the midst of last week’s earnings call, after the company had released strong results, Demand Media CEO and co-founder Richard Rosenblatt made an unusual declaration about its once-tight affiliation with now-disgraced professional racing cyclist Lance Armstrong.

Said Rosenblatt about the Santa Monica, Calif., social content company to Wall Street analysts about the status of the relationship in the wake of Armstrong being stripped of his many Tour de France titles:

“Our relationship is with the Livestrong Foundation, not with Lance, and we are aligned in empowering people to live healthier lives, and we support the important work of the foundation. We have built a powerful destination, popular applications and a very engaged community. None of this has changed and we have seen no material impact on the consumer traffic or metrics.”

In reality, the once-close relationship between Demand and Armstrong ended a while ago, even though the athlete’s cancer-fighting charity has been a high-profile shareholder since early 2008. At the time, Demand struck a four-year exclusive deal with Livestrong to create a health and wellness site, and also got a perpetual license to the Livestrong.com domain name.

But Armstrong — despite appearing at the Web 2.0 conference in 2008 with Rosenblatt — eventually had little to do with the Demand brand.

And it is down to zero involvement now, after he recently stepped down as chairman of Livestrong, due to the doping controversy. That mess has caused a lot of the brands he was tied up with, such as Nike, to disassociate themselves from Armstrong himself, although not from the Livestrong Foundation.

That has also been Demand’s direction, especially given that the commercial Web site, which has become the No. 3 health property in the U.S., is one of the company’s strongest ones. That adds up to about 26 million monthly unique visitors, a gain of 97 percent since last year.

But with that success, why did Demand make the statement at earnings — as well as putting up a blog post recently clarifying that it had “no direct relationship” with Armstrong?

Apparently, according to several sources, Demand had to move to be as explicit has possible, not because of consumers, but because of advertisers.

“The advertisers did care about the affiliation,” said one source. “So it was time to say in no uncertain terms to them and shareholders that Lance Armstrong has nothing to do with Demand.”

Or, as the blog post in late October noted rather strongly:

“We don’t believe the struggles of one individual should detract from the millions of real people who have benefited from work that’s been done to prevent cancer and improve the lives of those unfortunate enough to have it.”

Or, as they say in bike racing, Armstrong had simply become too much of a wheel sucker.

This is a massive move and also a risky one. Yahoo’s homepage sees about 170 million daily users who click in to do a variety of things. That huge traffic means that advertising placements earn big bucks from marketers — which inside sources said is typically upwards of $350,000 for a prime placement for a day, rising in price depending on complexity.

Thus, making any dramatic change to the powerful homepage is a big deal for Yahoo’s bottom line, especially in the important fourth quarter, when big advertisers spend a lot of money online and expect big results.

And the latest versions are certainly a major shift from Yahoo’s older look, with the latest using an interactive tiled approach at the very top that suggests the design spawn of Microsoft’s Windows 8 and Flipboard’s elegant social reading app.

As I noted last week, along with experiments in infinite scrolling, a simplified logo and giving search more prominence, Yahoo’s homepage change seems to be aimed at being consumed on touch-responsive, non-PC devices.

That’s no surprise, since Mayer declared in a recent earnings call that Yahoo was going to veer toward a “mobile first” sensibility. “Yahoo will have to be a predominantly mobile company,” she said.

She also has to aim at being a reliable digital company, it seems. In a bit of unlucky timing — even as Yahoo prepped the home page redo, as well as major overhauls of other products — its hugely popular Fantasy Football offering went down right as eight games were about to start at 10 am PT.

Yahoo acknowledged the slowness in its servers on Twitter, noting: “We’re still working to fix fantasy server issue & will update ASAP. We sincerely apologize for the inconvenience & appreciate your patience.”

Fantasy Football fans were livid, although this has happened before, especially to those who waited to do their lineup. But some were also funny about the screw-up, as you can see below:

Yahoo Fantasy Football site is down. The Republicans were right; America has officially collapsed. The apocalypse is upon us.

— Steve Fuller (@fullsteve) November 11, 2012

Dear Google, please develop a fantasy football platform. That will end Yahoo! as we know it. Love, Long Suffering Yahoo! Fantasy users.

— WFAN Audio Clips (@WFANAudio) November 11, 2012

As of two hours ago, Yahoo said it was still working on the problem. Presumably, it will be the first fix-it challenge for new COO Henrique De Castro, who starts this week.

Hopefully, Yahoo will not have such problems with the homepage rollout, once the final version is selected.

Until then, please check out two images of yet another version, which is similar — although not the same — as the one I posted last week. In the latest design, for example, the swooshy scroll at the top is smaller and a 300 by 250-sized ad unit is back in place at the top. Overall, it is a little bit more conservative, although still streamlined.

Here they are, along with a more dramatic one from last week and also a recent Yahoo homepage:

.

(Mark Sanchez photo: Debby Wong / Shutterstock.com)

Another week and yet another new design for the Yahoo homepage is being tested out on users — this time, it appears to be one (which you can see below) that looks a lot like Microsoft Windows 8’s touchscreen tiled approach (which is here).

After already putting out tests in the field with infinite scrolling, a simplified logo and giving search more prominence, the Silicon Valley Internet giant is apparently testing an even more drastically different redesign of its key landing page — one that seems to be aimed at being consumed on touch-responsive, non-PC devices.

As you can see from the screenshots below — which a user sent me, and which look exactly like what many Yahoo sources have described to me recently — the design uses big photos tiled across the top of the page. It suggests an ethos that is reminiscent of the new approach by Microsoft, as well as many others, such as Flipboard and Pinterest.

All of these encourage users to reach out and touch, scroll and swoosh. In fact, there are side-swiping arrows on the new Yahoo design.

Also part of the look, which is still being tweaked: More simplified icons for various Yahoo properties, fewer text links, additional social and personalization aspects and — perhaps most importantly — no advertising module at the very top.

That’s interesting, since Yahoo’s homepage is a big moneymaker for the company, because of its huge daily traffic. Thus, any new homepage design will have both massive consumer and financial impact on the company.

Sources said that one possible plan is to move from several 300 by 250-sized ad units to a single 300 by 600, which other sites like AOL have shifted toward. Such a change will not be without controversy for marketers.

It will also present a fresh selling challenge for new COO Henrique De Castro, who arrives at Yahoo from Google next week, and who will be helming sales efforts. (Hey, Henrique — get ready for my upcoming 360-degree profile of you!)

The latest redo is now being iterated under the regime of new CEO Marissa Mayer, under an awfully confident codename, Project Homerun. We’ll see if it is San Francisco Giant’s Panda-worthy, but sources said it is set to be released widely within the next two months.

But, while some new designs that have surfaced have been closer to the current version of Yahoo, the latest design is a more significant shift that would clearly lend itself well to mobile touchscreens, especially on increasingly popular tablets.

Along with Pinterest, Flipboard and Windows 8, other sites have done this, of course, most particularly pioneering content design done several years ago by BermanBraun’s Wonderwall for Microsoft’s MSN portal.

That’s no surprise, since Mayer declared in a recent earnings call — articulating what many desktop-trapped Silicon Valley Internet giants have also done recently — that Yahoo was going to also veer toward a “mobile first” sensibility.

“Yahoo will have to be a predominantly mobile company,” she said in the third-quarter earnings call.

Here’s what that seems to mean for Yahoo, with the new homepage images, as well as one of the current one to compare:

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.

The final death rattle of the Digg we once knew sounded last month, when tech development firm Betaworks purchased the site for a price much lower than the $160 million dollar valuation the company once heralded.

Betaworks’ plan: Rebuild Digg “as a start-up: Low budget, small team, fast cycles.” That included a complete redesign, which launched earlier this month, in hopes that a fresh start will give the site a new lease on Web life.

Though noble in its aim, Betaworks’ first efforts may have crippled the new Digg before it has a chance to leave the starting line.

In order to remedy many of the costly issues that the former Digg team suffered, Betaworks shuttled a number of features once prominent in Digg’s past iterations; the commenting system has been nuked completely, and all of the past articles and activities shared by past users have been wiped clean from the site.

The upside is, we’re left with a clean design and some nifty new sharing features that sync between mobile and desktop devices. The larger issue at hand, however, is that Digg’s existing user base — however dwindling and meager it was — is left with no virtual footprint on the site whatever. Profile history, submissions, comments — all gone from the new Digg.

Philosophically, this cuts to the heart of what a social, community-based sharing site needs in order to thrive. Digg is essentially only as successful as the volume and quality of content that is shared by its users; users who want to talk with each other about the items they’ve submitted, to riff on and build off of each new link in the network. This concept of community building has been crucial to competitor sites like Reddit — which is currently flourishing, trafficwise, with more than two billion pageviews served in the month of December 20122011 alone — which still retains all of the items that the new Digg now lacks.

Take a look at the latest stats from online ad network and data analytics firm Chitika, which show a drastic drop in traffic shortly after July 30, the day Betaworks launched the new version of Digg. Chitika measured hundreds of millions of ad impressions across the Web to determine referral rates from Digg and a handful of its competitors. The chart below relays that information as an index, with the highest level of traffic assigned the value “1.”

As you can see, Digg’s brief spike came in the wee hours between July 31 and Aug. 1, then went on to plummet and not return for the remainder of the week. That’s rough, especially in the early days of a highly publicized redesign, when Digg should be getting the initial traffic that it needs to foster the growth of its shattered community.

Compare it to the traffic index of competitors like Reddit and StumbleUpon, and Digg has a heck of a lot of ground to make up:

Now to be fair, Betaworks says it still has that old trove of user data, and wants to make it available for the old Digg’s patrons to access. “We believe that users own the data they create,” the company says on its Web site. It’s dubbed the Digg Archive, and the company is working on a way to unearth user data from the previous Digg infrastructure so that users can access it. By the end of this month, Betaworks aims to “open up an archive website to help users find, read, and share a history of their submissions, diggs, and comments.”

Problem is, how compelling is it to open what essentially amounts to a museum of old data from a network that truly doesn’t exist anymore? Sure, it’s nice to have access to what I did when I was an active user, but if that information has no bearing on the new site, it becomes less relevant and interesting to me. That’s a distinct disadvantage against a site like Reddit, which relies on a “karma” system, with points distributed amongst users based on their link and comment-submission history. It’s what makes some users stand out among others, and what keeps many coming back to the site regularly.

Will Digg’s new approach find legs over time? There’s no telling, but in a time where Facebook, Twitter and Reddit are far into their maturity, the new Digg sure has its work cut out for it.

The results are playing out inside a state traffic-management center in Woodbridge, N.J. That’s where New Jersey officials watch a 22-foot-high mounted screen as supercomputers powered by start-up Inrix Inc. scoop up millions of cellphone and GPS signals, make sense of the jumble of information about car speeds, weather conditions and sports schedules, and translate the data into maps of traffic along 2,600 miles of the state’s roads.

Read the rest of this post on the original site »

That was likely the case on Monday as Apple detailed the next version of iOS. Apple announced that its next iPhone and iPad software will add, among other features, options for offline reading, synchronized browser tabs and crowd-sourced traffic, along with new software for managing boarding passes, loyalty cards and movie tickets. All are areas currently served, at least in part, through third-party applications.

But one of those that would appear to be in Apple’s crosshairs, Waze, says it isn’t too worried about Apple’s move into its home turf of crowdsourced navigation.

“I think it is going to be okay,” Waze’s VP Community Geographer Di-Ann Eisnor said in a phone interview on Monday. “This is really an issue of Apple and Google competing over local search. This is a battle that has nothing to do with us.”

Eisnor said that her company has expected for some time that Apple would emerge as a competitor. During a controversy over the collection of location information last year, Apple said that it needed the information it was gathering for, among other things, a crowdsourced traffic database.

Still, Apple would appear to be building in a service very similar to what Waze offers. But Eisnor says Waze isn’t standing still.

The company is planning an announcement for next week that will expand the service beyond its traditional navigation and crowdsourced traffic roots.

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There’s no question that every venture capitalist within 100 miles of Silicon Valley wanted to squeeze their khaki-clad selves into what had become tech’s hottest deal of late.

That would be to get a piece of the new round of funding for start-up phenom Pinterest.

But while piles of VCs and other investors tried to work every angle possible to noodge into the action, the iconoclastic CEO and co-founder Ben Silbermann decided to go big and go global by hooking up with a Tokyo-based Internet giant.

Japan’s Rakuten will invest upwards of $50 million in a $100 million round that values the social bookmarking site at $1.5 billion.

Rakuten is one of the largest online commerce companies in the world, with a flagship site Rakuten Ichiba, among others. It was founded in 1997 and had revenue of $4.7 billion in 2011.

Most important in Pinterest’s calculation was apparently the link with its CEO Hiroshi Mikitani, whose nickname is Mickey. One the richest men in Japan, Mikitani is one of the best known entrepreneurs there where he’s been described as “Richard Branson meets Jeff Bezos.”

I briefly chatted with Mikitani last night about why he decided on the Pinterest deal, in a conversation where he focused a bit on Rakuten’s famed “omotenashi” or “empowerment” philosophy. Simply put, the concept is that — unlike an Amazon — Rakuten is a facilitator of commerce, much like its shopping mall metaphor beginnings. The approach is to aid merchants rather than compete with them.

It’s a little eBay, a little Alibaba, some Etsy and even a little Amazon Web Services mixed in. It’s also a place that can move retail globally, which is presumably the attraction to it by Pinterest.

ATD: Why did Pinterest pick you?

Mikitani: We are not a venture capitalist. We got together and talked about our story and our history.

We agreed that we shared a vision of the future of Internet e-commerce.

ATD: Why make an investment?

Mikitani: When we started to talk about being involved in the round of investment, we wanted to invest as much as possible.

We were very impressed by their business model and also the management style.

ATD: What made Pinterest so attractive in comparsion to other similar companies?

Everyone is talking about social commerce and best solution to social commerce, but Pinterest really was the first to use graphics that well to connect with people.

Rarely have we seen such a powerful media and we were seeing huge traffic coming from Pinterest [to Rakuten sites]. It was much higher than anyone else.

ATD: What do you bring to the table?

Mikitani: I think there are some things we think we can do with our expertise. Ben and his team have an extremely strong commitment to make their products as attractive as possible.

But we have 40,000 stores in Japan and we can give them access to our customers and do aggregation to engage in everything. And we have sites in many other countries too.

ATD: How are you going to work together?

Mikitani: We are not going to stop them from doing dealings with other e-commerce companies. But we can have more constructive input on how to make their site more effective from e-commerce point of view.

This is a long-term arrangement and we have a strong committment and attachment to this business. We truly understand their business and respect their management.

There’s a popular maxim in Silicon Valley: Find your user base and the revenues will come later.

For a while, it seemed to be the easiest way for a founder to explain his or her way out of a proper business model. But with Facebook’s $1 billion acquisition of the entirely revenue-free Instagram, that adage now carries more weight than ever.

Enter Viddy and Socialcam, two of the hottest start-up apps, both of which have the buzz of being the “Instagram for video.” The pair have exploded in popularity over the past few months, with each garnering user bases in the tens of millions seemingly overnight.

But the growth of one of these apps is not like the other.

Using a combination of fortunate timing, Facebook’s Open Graph influence and a new way of playing the system, Socialcam has effectively gamed Facebook, YouTube and the App Store to keep a strong grip on that ever-so-valuable user base. In the short term, at least, the three-man Socialcam start-up team has discovered a method to beat the 20-plus person outfit that is Viddy.

The method is so effective that Socialcam skyrocketed from around 1.4 million monthly active Facebook users to a whopping 40 million in a span of little more than two weeks. Socialcam surpassed Viddy in the Facebook app rankings last week, and currently sits fat atop Apple’s powerful App Store as one of the most downloaded free applications.

Some have started picking up on Socialcam’s tactics. Threads arose on Quora and Hacker News questioning the validity of the app’s growth, and TheNextWeb picked some of this apart on Thursday.

But there’s far more to it.

History

The concept of social video has been simmering for some time. Viddy was founded in December of 2010, while competitors like Mobli, Klip and Socialcam came along at various points during 2011.

But it was only over the past few months that the mobile social video concept began to boil. Socialcam hit the three million user mark in December. The Instagram acquisition announcement hit the web on April 9th. Two days later, Viddy hit 4 million users.

At some point on April 24, social video apps exploded, and it suddenly became clearer that Viddy and Socialcam were leaving all of their competitors behind.

Web view traffic to Socialcam through Facebook skyrocketed from around 10 million monthly active users to an astounding 40 million MAUs over a period of two weeks. Viddy jumped from around eight million MAUs to upwards of 36 million over that same period.

It was as if someone had flipped on the awesome traffic switch.

What Happened That Fateful Day in April?

What isn’t clear is just who or what flipped that switch. But I’m hearing many different theories.

Theory No. 1: Socialcam received its Facebook Open Graph integration around this time, thus increasing the app’s visibility in users’ Timelines. But Viddy’s Open Graph integration had already occurred on March 12, more than a month previously, at South by Southwest, and both apps received immense boosts in traffic during that same time period.

It’s possible that Socialcam’s Open Graph jumpstart fueled Viddy’s growth by mere virtue of being another social video app. Or perhaps it was the announcement that Twitter co-founder Biz Stone, Shakira and Jay-Z would back Viddy financially, the news of which occurred two days before Socialcam’s Open Graph integration.

Theory No. 2: A more conspiracy-like theory in which Facebook itself made changes to its News Feed in favor of the “Watch” action for social videos on the whole.

Consider this: When the once-popular Facebook social reading apps like the Guardian and Washington Post Social Reader recently started tanking in their monthly active user ratings, Ryan Kellett, a Washington Post employee, confirmed to TechCrunch that it was indeed changes in Facebook’s News Feed that led to Social Reader’s decline. It’s feasible, then, to think that Facebook could tweak things in the other direction, in order to favor video apps.

And, indeed, SocialCam, Klip, YouTube, Viddy and DailyMotion all saw spikes in Facebook traffic on April 24 — some more than others — with Mobli’s traffic following suit shortly thereafter.

Facebook declined to comment to AllThingsD on the near instantaneous rise on April 24, although it did shrug off the date in question to the New York Times: “The popularity of videos and other user-generated content on Facebook is not new, so it’s no surprise that social video apps are growing as friends share with each other and as more developers experiment with this type of content on Facebook.”

In a tweet on Saturday, TechCrunch writer Josh Constine noted that the sudden burst of growth on April 24 was due to a reporting error from Facebook to third-party app tracking site AppData. That also seems reasonable, although doesn’t fully explain the sudden traffic explosion that occurred over that two- to three-week period.

Whatever actually happened, Socialcam saw the chance to seize its moment.

Gaming Facebook

After receiving the boost, Socialcam’s founders discovered the perfect way of keeping that veritable fire hose of Facebook Web traffic pouring in.

According to multiple sources, it was around this time Socialcam began scraping video content from Vevo and YouTube to add to its own network of users, which essentially amounts to ripping content directly from other services.

As you might imagine, it’s not a welcome practice.

Then, sources said, Socialcam uploaded that video content to its own servers, where it began distributing it via different dummy accounts on the Socialcam network. There’s a slew of “YouTube Popular” accounts doing much of the distribution, along with others.

So, in effect, when a Socialcam user on a mobile device clicked on what he thought was a Socialcam video, he was taken into SocialCam’s Custom player, where the ripped YouTube video was played from Socialcam’s servers.

Herein lies the cleverness of the plan: Scraping and ripping stripped each video of its YouTube wrapping, or in the case of Vevo, its pre-roll advertising. So initially, users weren’t even aware they were watching YouTube videos. Socialcam systematically targeted a number of the most viral videos uploaded YouTube in the past four to five years, said sources, aiming to harness that viral success and bolster Socialcam’s network.

Why go to this trouble, especially since it’s against the terms of service to rip off the YouTube APIs? That risks sullying a relationship with a large and powerful online content powerhouse. Embedding the YouTube code within a Socialcam video instead of ripping YouTube’s content would comply with YouTube’s ToS. It’s also potential fodder to get its app booted from Facebook’s platform.

When asked if Socialcam was ripping YouTube videos, YouTube was cagey, only telling me this:

“While we don’t comment on individual cases, however, we take any violation of our open API’s Terms of Service seriously and take action against known abusers,” a spokesperson for YouTube told me.

A Facebook spokesperson concurred: “If it comes to our attention that an app is violating our policies, we will take action. We have no further details to share at this time.”

Vevo declined my request for comment.

Socialcam CEO Michael Seibel responded: “Socialcam has weekly and often daily interaction with the developer relations teams at both Facebook and Youtube. To the best of our knowledge, we are not violating the terms of service of either company.”

But what apparently happened, said sources, was that Socialcam got caught scraping and was told to knock it off. So to continue with its plan but stay compliant with Facebook and YouTube Terms of Service policies, Socialcam then began embedding the YouTube videos into Socialcam posts, effectively doing the same thing as before, only with the YouTube branding in place.

As of last week, nearly every top trending video on Socialcam’s site was a YouTube video.

Combine the viral nature of those YouTube videos with Facebook’s traffic-driving Open Graph, and you’ve got a recipe for success. If an app is integrated into Open Graph like Socialcam and Viddy are, using those apps publishes activity to three sections of Facebook: Timeline, Ticker and the News Feed. With every click, each user would broadcast the videos they had just watched, and that traffic fed on itself.

Despite the fact that social video on the whole received early initial traffic boosts by some yet-to-be-pinpointed variable, Socialcam was able to retain that traffic through proliferating YouTube videos throughout Facebook.

In a way, the guys behind Socialcam are brilliant, cracking a method of using YouTube and Facebook together to extend the app’s reach in a matter of weeks.

And it worked: The app still sits atop the App Store, using its Facebook viral success to boost download numbers immensely. It has soared beyond Viddy and other similar apps, most of which have been around much longer than Socialcam has.

Is All Fair in Apps and War?

And here’s the thing: Aside from the alleged initial screen-scraping, doing what Socialcam is currently doing isn’t breaking any rules.

Sure, its largest competitor, Viddy, is definitely not a fan of the practice. The company spent the past 18 months building its subscriber base out with user-generated content, not to mention raising tens of millions of dollars in venture funding in order to do so.

And Viddy CEO and co-founder Brett O’Brien is making no bones about his discontent.

“Viddy is built on 100 percent community-generated original content, which we feel is the only way to build a true social community as Facebook, Instagram and others have done,” O’Brien told me in an interview, a thinly veiled slight at Socialcam’s YouTube video poaching. “Our active community of over 27 million Viddyographers is passionate about Viddy and is actively growing the community through sharing. Viddy is clearly filling a consumer need to easily create, beautify and share original video content.”

The problem for Viddy is, others are catching on. Of the top 10 fastest growing Facebook apps from the past week, half of them are social video apps. Most recently, Chill gained more than eight million users in as little as two weeks. All but Viddy use a mix of content, both user-generated and user-curated — although Socialcam still remains the most adept at working the larger ecosystem.

It seems, however, that in light of the recent negative press Socialcam has received, the company decided to tweak its app on Tuesday afternoon, incorporating a handful of subtle changes. YouTube videos are now labeled much more explicitly. A bug which kept users auto-sharing their videos to their feeds — whether they turned the option on or off — has been fixed. And now Socialcam’s “Trending Bar” — the one replete with YouTube videos — is gone from the site.

Still, as the social apps using these methods proliferate, it’ll only get harder for non-viral videos to rise to the top. According to one source, Facebook’s News Feed only allows for a certain percentage of its inventory devoted to video. The algorithm that determines which videos make it into that inventory is based on click-through rate, as well as the number of comments, likes and shares it received. Still, click-through rate weighs heavy on that scale.

In that case, it’s obvious that when Socialcam — and apps like it — seed Facebook with the most viral YouTube apps of all time, click-through rates and shares will skyrocket, and those apps will take a much larger portion of the video News Feed pie.

The question, then, becomes a philosophical one: Is it fair? Since Socialcam essentially cracked the video sharing code, does it not deserve its seat at the top of the charts?

That point remains contentious. As Socialcam CEO Michael Seibel told me, the company’s “simple goal is to allow users to create amazing videos and watch videos shared by their friends.” And as Seibel explained on Bloomberg West last week, “people want to see the videos that their friends are watching.”

But, if all that is being watched are the most viral videos Socialcam has seeded, are users not just watching what Socialcam directs them to?

The war isn’t over. Perhaps Facebook will tweak its algorithm to compensate for the types of videos. Or perhaps Socialcam and others like it will ride to the top on YouTube videos, then see an influx of user-generated content after reaching a critical mass of subscribers.

And again, like that old Valley adage goes — it’s all about the user base, right?

According to sources close to the situation, Demand Media was deep into discussions with a private equity firm to complete a deal that would have taken the online content company private, nearing a price that was double its current value.

But Demand abandoned the effort this past week — which was born from an aggressive attempt by Boston-based Thomas H. Lee Partners to purchase the company for a price of up to $1.2 billion. That was due to a number of challenges, including complications related to its financing and the ability to retain executives in its aftermath.

The move on Demand by private investors is perhaps no surprise, and is part of a wider trend related to some Internet companies whose stocks have a depressed value relative to the worth of their assets.

Among companies having been and also being evaluated by private equity firms, whose business it is to turned the undervalued into a goldmine: Yahoo and AOL.

And also Demand, which is now worth only $605 million, a market cap that is off 65 percent since it went public in February 2011. Shares now trade at $7.25 each.

That depressed share price has been due to a number of issues, most especially changes to Google’s search algorithm to improve results. Called Panda, the changes at the search giant — a critical partner of Demand’s — has cut traffic to its major content sites and also called into question its ability to monetize its scaled editorial efforts.

Such a situation is nearly irresistible to PE firms — in this case, Lee, which approached Demand.

Several sources said that the board threw out a hefty number that it assumed would shut down any interest and the pair began talking with an initial offer to take the company private at $11.28 a share.

That equals close to $1 billion for Demand, which also has more than $100 million in cash. But sources said Lee and Demand also discussed the addition of a large loan as part of the ongoing discussions, for possible acquisitions related to a content roll-up strategy it had, which would bring the total up to $1.2 billion.

One source underscored that the board of the Santa Monica, Calif., company had no interest or intention to sell the business, but that the premium was large enough that it engaged.

The deal from Lee, which also included a strategy of splitting up the content arm from Demand’s lucrative domain-registar business.

There were also large cash-out provisions for major shareholders, as well as for CEO and co-founder Richard Rosenblatt.

Thus, the two sides engaged intensely in the last several weeks in crafting an agreement, although the devil would prove to be in the details.

One big issue is that taking Demand private was still a big financial commitment for Lee — which tried to engage some of its limited partners in the transaction — as well as other investors, including Silicon Valley’s Marc Andreessen.

That proved harder than Lee thought, said sources, with some balking at the firm’s ability to make a big enough score on the possible turnaround.

“It was hoped it would be a Skype situation, but there were worries,” said one source, referring to the blockbuster sale of the Internet telephony company by private investors to Microsoft for $8.5 billion last year. That deal was widely considered a PE home run, given the excessive premium paid for it.

Demand’s challenges increasingly worried the firm as it moved forward, sources said, causing it to reevaluate its earlier bid several times.

Also a worry: Retaining major talent, including Rosenblatt and others, after they sold large chunks of their equity.

After Lee asked for more time to complete the financing, Demand ended the talks last week.

Another source, as is typical in these endings, said it was the Lee that walked away (who knows and, really, who cares — both sides were engaged seriously).

One thing was true: “Demand was definitely at the altar, but it did not get to the vows,” said one source.

Another source noted that the board also determined that Demand’s situation was improving, and that new trends are showing that the bottom might be been reached. The company reports its first-quarter earnings on May 8, which is expected to show some traction related to its many challenges.

“There is nothing Lee could do that Demand could not do for itself,” said one person. “So throwing in the towel seemed premature for now.”

Lee declined to comment, as did Demand.

Five years ago, AllThingsD.com was launched with just a few staffers, a few stories and a whole lot of hope. Also, as it turned out, with a panoply of LOLcat photos.

The site had soft-launched a little earlier, but — officially — we opened our doors in the late evening of April 26, 2007. Walt Mossberg wrote about a Kodak printer; John Paczkowski wrote about, wait for it, Apple; and I opined on how then-Yahoo-CEO Terry Semel might save the troubled company.

The more things change …

Actually, despite the fact that we have grown hugely in both traffic and staff, and have logged almost 26,000 posts, little has changed in how ATD looks at its role in covering tech, using stringent standards of fairness, accuracy, ethics and reporting.

As I wrote back then: “That is what we will be trying to do most of the time here, attempting to figure out what is happening in the digital space and explaining it in a way that is clear and cogent.”

And, of course, have some fun doing it.

Thus, mission accomplished, and mission never accomplished, too.

Walt and I want to thank everyone, from our outstanding staff to our Dow Jones colleagues to the many companies we cover to — most of all — our readers.

There is a lot more to come going forward, and we hope to never disappoint and always delight.

And, as I also wrote back then at the dawn of AllThingsD:

“But enough looking back: On to the next thing.”

And to my amazing partner, Walt, you knew I could not resist:

Demand Media, which has suffered from stock weakness and worries about its traffic and costs, beat Wall Street expectations in its fourth quarter earnings report, which was released after the market closed today.

The Santa Monica, Calif., online media company said it earned eight cents per share, up one cent on analysts’ estimates of seven cents. Revenue came in slightly higher too, at $84.4 million compared to an expected $81.95 million.

Still, Demand shares were down almost five percent in after-hours trading on the news, to $5.94.

Demand said that about $50 million of that came from its content businesses, while just over $31 million was due to its registrar business.

Free cash flow was up five-fold from $3.3 million to $18.3 million, which Demand said was due to cost controls and decreased spend on its flagship eHow site, which has seen changes in its content and distribution platform.

Demand also said it is going to buy back more of its stock, upping a $25 million plan to $50 million.

Said the company:

“During the fourth quarter of 2011, Demand Media repurchased 1.9 million shares of common stock for $13.3 million under its Board-authorized $25.0 million share repurchase program. To date, the Company has repurchased 2.8 million shares of common stock for $20.1 million. On February 8, 2012, Demand Media’s Board authorized an increase of $25.0 million to the program, taking its total authorized repurchases to $50.0 million.”

In a conference call with analysts after the reports, CEO Richard Rosenblatt acknowledged it was a “turbulent year,” but noted that Demand would be enhancing its properties for higher page views and more direct traffic.

He also addressed the departure of some of Demand’s founders. “All three were very important members of our team,” he said. “But it’s the natural evolution of a young company.”

If you want more deets, read all about it here in the company’s official press release:

4Q11 Results Release FINAL02.16.12

A little more than a week ago, Morgan Stanley kneecapped Demand Media’s stock by downgrading the Santa Monica, Calif., online content company’s prospects.

Some worries: Pressure from algorithm-tweaking Google, upon which Demand relies heavily for traffic; worrisome drops in said traffic due to said tweaking; and not enough uptake on higher-quality, premium stories the company had promised in the fall.

Demand shares fell 6.5 percent that day, to close at $5.93.

It has recovered a bit to $6.13 today, but is still off almost 8 percent since the beginning of the year, and 71 percent from a year ago.

One irony to the tough call by Scott Devitt, of course, was that Morgan Stanley was the investment bank that had taken Demand public in January of 2011, at $17 a share.

In addition, the recent departure of three of the company’s six founders has also worried investors.

All this will presumably be on display today when Demand reports its fourth-quarter earnings. Wall Street analysts are expecting Demand to earn seven cents a share on an adjusted basis on an expected $81.95 million in revenue.

We’ll see after the market closes, as well as what its execs have to say about the key metrics of costs and traffic.

Traffic to the website — which lets users create online scrapbooks to share images of projects or coveted products — has grown tenfold over the past six months. In January, the number of visitors on Pinterest.com was almost a third of that on Twitter.com.

There is one problem: The 16-person Palo Alto, Calif., start-up isn’t sure how it is going to make money.

Read the rest of this post on the original site »

As compared to other social networking sites, Pinterest’s users are more frequently from the Northwest and the Southeast, with strong presences in states that seem to have large hobby-and-crafting populations, Hitwise said. That’s all very logical, but it makes the growth no less impressive.

Pinterest also shares the wealth, since its pins are linked to content sources, which are often e-commerce sites. Sites like Etsy and Nordstrom say Pinterest is a significant and growing traffic referrer.

Pinterest closed $27 million in funding led by Andreessen Horowitz in October, in a round that many other VCs would have liked to pin down.

Demand Media beat Wall Street expectations in the third quarter, posting a loss of five cents a share. Investors had expected it to lose from four to six cents.

Revenue was up 25 percent to $85.1 million, compared to $65.4 million in the same period a year ago. Minus traffic acquisition costs, sales increased 26 percent to $78.1 million from $62.2 million.

The stock of the Santa Monica, Calif., social content company has suffered in the quarter due to worries about its traffic and growth, but it has recently bounced back after hitting all-time lows.

After losing almost nine percent today, in profit-taking ahead of earnings after a recent price surge, Demand shares rose over 17 percent in after-hours trading to $8.30.

Some more details, according to a Demand statement on the Q3 financial results:

Content & Media Revenue increased 27% to $50.7 million, compared with $39.8 million in Q310.

Traffic acquisition costs (TAC), which represent the portion of Content & Media revenue shared with Demand Media partners, of $3.4 million, or 6.7% of Content & Media revenue, compared with $3.2 million, or 7.9% of Content & Media revenue, in Q310.

Content & Media Revenue ex-TAC grew 29% to $47.4 million, from $36.7 million in Q310.

Registrar Revenue increased 20% to $30.7 million compared with $25.5 million in Q310.

In addition to its more high-profile content business, Demand also has a domain registry unit.

“We reported another strong quarter as we continue to build Demand Media’s foundation for long-term growth,” said Richard Rosenblatt, Chairman and CEO of Demand Media in the statement. “The Company is uniquely positioned to deliver data-driven professional content through its robust content publishing platform. We are now in the process of optimizing that platform while increasing our investment in video content and enhancing the quality, engagement and user experience of our sites.”

There will be a conference call at 2 pm PT today, which I will liveblog (as long as it is lively!).

Until then, enjoy the official Q3 earnings press release:

3Q11 Earnings ReleaseFINAL