Marissa Mayer: Aviate key to Yahoo's mobile ad biz

Right from the start of her tenure in July 2012, Yahoo CEO Marissa Mayer has said repeatedly that she wants Yahoo to be synonymous with mobile computing. If she's successful in achieving her ambition, a small, little-known artificial intelligence company called Aviate figures to play a pivotal role.

Akin to the service Google Now, Aviate takes advantage of a user's context -- like frequently used apps or the time of day -- to surface useful apps and information on an Android homescreen the moment it becomes most useful. Yahoo announced the rumored $80 million acquisition in January during her keynote at the Consumer Electronics Show in Las Vegas, and it already merited a special call-out during the company's latest earnings call.

"Aviate is a central part of our mobile search," Mayer said during a video conference call on Tuesday to discuss first quarter earnings.

But a good user experience isn't the only thing Mayer is after. She -- and more importantly, investors -- are concerned with bolstering mobile advertising opportunities, an area Yahoo has fallen sharply behind on. Last quarter, she said the company's mobile advertising revenue is "not material." By contrast, Facebook makes about 53 percent of its advertising revenue on mobile.

Yahoo has put a lot of investment recently in native ads, or the type of ad that fits in more with editorial content than one that's clearly cordoned off. In February, Yahoo launched Gemini, a marketplace geared toward advertisers interesting in native ads. Aviate, Mayer said, will be where the company can experiment with those ads.

"What formats work well when we look at contextual search?" Mayers said. Native ads, "work well with Aviate. There's a lot of experimentation."

"We think there's a great opportunity there to be really industry leading," she continued. "That's what our acquisition of Aviate was really about."

When asked by CNET in April, Sameet Sinha, a senior analyst at research firm B. Riley and Co. (which owns a small holding in Yahoo), speculated on the opportunity. "If something can tie together your life, there is significant opportunity there to monetize each step: In the morning, stop at this place to get coffee, then this gas station," he said.

As of March, Aviate co-founder Mark Daiss told CNET there were no plans for monetization on the service, though that could change. Still, it was a part of the company's thinking from nearly the beginning. Cameron Teitelman, who founded the Stanford incubator StartX, in which Aviate participated, said lead generation was a big part of Aviate's business plan, as it developed over the 11-week program.

Aviate is just one of a slew of acquisitions Mayer has made since taking the top job at the company in 2012. She has gotten flak at times for all the seemingly disparate investments she's made -- from video startups to the blogging platform Tumblr to talent grabs like news anchor Katie Couric.

Critics say her approach lacks focus, but on Tuesday, she tried to present a cohesive strategy. She distilled the approach into four golden buzzwords: mobile, video, social, and native. Mayer described these areas to be "nascent" and still a small part of the company compared with Yahoo's overall business, but this is clearly her vision for the company -- four buckets into which every strategic move can be dropped.

That shift may be a good thing, considering Yahoo's current core business -- search and display advertising -- is still sluggish for the most part. Both area saw small gains in Tuesday's earnings report -- display was up 2 percent and search was up 9 percent -- but Yahoo still lags behind the other tech giants in key advertising metrics. Last year, Facebook overtook Yahoo for the first time in display advertising, according to the research firm eMarketer.

Asked by an analyst on Tuesday to rank each of the four areas by importance, Mayer dodged, but said the most important for now is, unsurprisingly, mobile.