The deal, announced on Monday, is a bold bet by Yahoo Chief
Executive Marissa Mayer to revitalize the company by co-opting a
Web property with strong visitor traffic but little revenue.

The acquisition, which will use up about a fifth of Yahoo’s
$5.4 billion in cash and marketable securities, is the largest
by far since Mayer took the reins in July with the goal of
reversing a long decline in Yahoo’s business and Web traffic.

Analysts said Yahoo appeared to be overpaying for a business
that might not contribute to revenue for years, but that it had
to do something to plug a hole in its social media efforts.

RBC Capital Markets analyst Mark Mahaney called it a
“long-shot/long-term investment” but one that fits into Mayer’s
turnaround strategy.

“(Yahoo’s) fundamentals have been subpar for numerous years,
in part because of the company’s missing presence in Social and
Mobile. Tumblr may help (Yahoo) develop that presence,” Mahaney
said in a note.

Tumblr is one of the Web’s most popular hubs of so-called
user-generated content. The deal will help Yahoo reach a younger
generation of users less tied to traditional Web portal and
email services.

Though Yahoo remains one of the Web’s most popular
destinations, it has seen its revenue shrink in recent years as
consumers and advertisers favor rivals such as Google Inc
and Facebook Inc. The deal is expected to
increase Yahoo’s audience by 50 percent.

Yahoo made clear it was sensitive to concerns that it might
somehow damage Tumblr by making it less irreverent or more
corporate.

“Per the agreement and our promise not to screw it up,
Tumblr will be independently operated as a separate business,”
Yahoo said in a statement.

RICH PREMIUM

Media reports have pegged Tumblr’s 2012 revenue at $13
million. The privately held company, based in Manhattan, does
not disclose its financial results.

“Even if revenue was $100 million, it means Yahoo paid 10
times revenue,” said BGC Financial analyst Colin Gillis. “Ten
times is what you pay to date the belle of the ball. It’s on the
outer bands of M&A.”

Yahoo could quickly boost Tumblr’s revenue by combining the
website with its own sales force, said Pivotal Research Group
analyst Brian Wieser. But loading Tumblr up with banner ads
risks alienating its users and probably wouldn’t provide a
significant lift to Yahoo’s overall revenue, he said.

“It’s not clear that this deal will be favorable from a
return-on-capital perspective,” Wieser said. “One billion
(dollars) for one company is a big bet.”

Gillis and Wieser were contacted on Sunday after the deal
was reported by the online publication All Things D.

Mayer, on a conference call with analysts on Monday,
described the Tumblr deal as an exception and said Yahoo was not
necessarily planning to make lots of similarly sized deals.

Shares of Yahoo rose in early trading on Monday but quickly
gave up those gains and were little changed at $26.54. Through
Friday’s close, they had risen 70 percent since Mayer became
CEO.

IMAGE ISSUES

One question Yahoo may have to address is Tumblr’s
reputation as a home for pornographic blogs. At one point in
2009, about 80 percent of Tumblr’s top sites had something to do
with adult content. Today that number is closer to 5 percent,
according to Quantcast data, but the perception remains.

Dealing with that issue may fall to David Karp, 26, who
founded Tumblr in 2007 and will remain CEO.

Karp, a self-taught programmer who left high school in favor
of home schooling, did not take part in Mayer’s conference call.
Media reports have suggested his take in the billion-dollar sale
would top $200 million.

In a 2012 interview with The Guardian, Karp seemed to be
less interested in money than in Tumblr’s prominence.

“There are a lot of rich people in the world. There are very
few people who have the privilege of getting to invent things
that billions of people use,” he said.

Google Glass, a cross between a mobile computer and
eyeglasses that can both record video and surf the Internet, is
now available to a select few but is already among the year’s
most buzz-worthy new gadgets. The device has geeks all aflutter
but is unnerving everyone from lawmakers to casino operators
worried about the potential for hitherto unimagined privacy and
policy violations.

“I had a friend and we’re sitting at dinner and about 30
minutes into it she said, ‘You know those things freak me out,’”
said Allen Firstenberg, a technology consultant at the Google
developers conference. He has been wearing Glass for about a
week but offered to take them off for the comfort of his dinner
companion.

On another occasion, Firstenberg admitted to walking into a
bathroom wearing his Glass without realizing it.

“Most of the day I totally forget it’s there,” he said.

Many believe wearable computers represent the next big shift
in technology, just as smartphones evolved from personal
computers. Apple and Samsung are said to be
working on other forms of wearable technology.

The test version of Glass looks like a clear pair of
eyeglasses with a hefty slab along the right side. Since it
began shipping to a couple thousand carefully selected early
adopters who paid about $1,500 for the device, it has inspired a
bit of ridicule – from a parody on “Saturday Night Live” to a
popular blog poking fun at its users.

Other industry experts take a more serious tack, pointing
out the potential for misuse because Glass can record video far
less conspicuously than a handheld device.

Glass also has won many fans. Google and some early users
maintain that privacy fears are overblown. As with traditional
video cameras, a tiny light blinks on to let people know when it
is recording.

Several Glass wearers at the developers conference said they
whip the device off in inappropriate situations, such as in gym
locker rooms or work meetings. Michael Evans, a Web developer
from Washington, D.C., attending the Google conference, said he
removed his Glass when he went to the movies, even though the
device would be ill-suited for recording a feature-length film.

“I just figured I don’t want to be the first guy kicked out
of the movies,” he said.

NO GLASS ALLOWED

A stamp-sized electronic screen mounted on the left side of
a pair of eyeglass frames, Glass can record video, access email,
provide turn-by-turn driving directions and retrieve info from
the Web by connecting wirelessly to a user’s cell phone.

Google Executive Chairman Eric Schmidt dismissed concerns
about the brave new world of wearable computers during a talk at
Harvard University’s Kennedy School of Government in April.

“Criticisms are inevitably from people who are afraid of
change or who have not figured out that there will be an
adaptation of society to it,” he said.

Schmidt acknowledged that there are certain places where
Glass will not be appropriate but that he believed new rules of
social etiquette will coalesce over time. Firstenberg said it
will take time for all sides to get comfortable with the new
technology.

“I don’t think we should go into the conversation assuming
that Glass is bad,” he said.

Indeed, previous technology innovations such as mobile
phones and wireless headsets that initially raised concerns are
now subject to tacit rules of etiquette, such as not talking
loudly on the bus and turning a ringer off in a meeting.

Still, some have decided to leave nothing to chance.

Casino operator Caesar’s Entertainment recently announced
that Glass is not permitted while gambling or when in showrooms,
though guests can wear it in other areas. In March, Seattle’s
Five Point Cafe made headlines for becoming the first bar to ban
Glass. “Respect our customers privacy as we’d expect them to
respect yours,” says a statement on the café’s website.

The California Highway Patrol says there is no law that
explicitly forbids a driver from wearing Glass while driving in
the state. But according to Officer Elon Steers, if a driver
appears to be distracted as a result of the device, an officer
can take enforcement action.

PRIVACY TRACK RECORD

Lawmakers are beginning to consider Glass.

On Thursday, eight members of the U.S. Congress sent a
letter to Google Chief Executive Larry Page, asking for details
about how Glass handles various privacy issues, including
whether it is capable of facial recognition.

According to Google, there are no facial recognition
technologies built into the device and it has no plans to do so
“unless we have strong privacy protections in place.”

During one of this week’s conference sessions – an open
discussion about Glass – members of the Glass team answered a
question about privacy by noting that social implications and
etiquette have been a big area of focus during the development
of the product, which is still a test version.

Some of the Glass-phobia may stem from Google’s own track
record on privacy. In 2010, Google revealed that its fleet of
Street View cars, which criss-cross the globe taking panoramic
photos for the Google Maps product, also had captured personal
information such as emails and web pages that were transmitted
over unencrypted home wireless networks.

“The fact that it’s Google offering the service, as opposed
to say Brookstone, raises privacy issues,” said Marc Rotenberg,
the executive director of the Electronic Privacy Information
Center, a non-profit privacy advocacy group, citing Google’s
history and its scale in Internet advertising.

Rotenberg says his main concern centers on the stream of
data collected by the devices – everything from audio and video
to a user’s location data – going to Google’s data centers.

Ryan Calo, a University of Washington law professor who
specializes in privacy and technology, said Glass is not very
different from other technologies available today, whether it is
a smartphone or “spy” pens that secretly record audio. But Glass
is on people’s faces, so it feels different.

“The face is a really intimate place and to have a piece of
technology on it is unsettling,” Calo said. “Much as a drone is
unsettling because we have some ideas of war.”

For all the hand-wringing, some early adopters are sold.

Ryan Warner, who recently graduated from college and who has
developed a recipe app for Glass with Evans, said he was
surprised by the reaction he got when he went to a bar.

“I was like, ‘I don’t know if I should have it on or not.’ I
was kind of in that phase,” he said, “and the bouncer was like,
‘Oh, my god, is that Google Glass?’ He was excited.”

With its new service, announced at its annual developers’ conference in San Francisco, Google has adopted the streaming music business model ahead of rival Apple Inc (AAPL.O: Quote, Profile, Research), which pioneered online music purchases with iTunes.

Google’s “All Access” service lets users customize song selections from 22 genres, ranging from Jazz to Indie music, stream individual playlists, or listen to a curated, radio-like stream that can be tweaked. It will be launched for U.S. users first, before being rolled out to several other countries.

At the conference, Google also unveiled improvements to other services, including new mapping features and a voice-activated search. The focus was on giving more options to users of mobile devices using its Android operating system.

Google’s shares jumped more than 3 percent while Pandora Media Inc shares were down more than 1 percent on Wednesday afternoon.

The entry of the world’s largest Internet company amps up the competition in the nascent market for subscription-based, streaming music. Amazon.com Inc (AMZN.O: Quote, Profile, Research) and Apple are among the Silicon Valley powerhouses sounding out top recording industry executives, according to sources with knowledge of talks.

Pandora is spending freely and racking up losses to expand globally. Even social media stalwarts Facebook (FB.O: Quote, Profile, Research) and Twitter are jumping onto the streaming-music bandwagon.

All these companies see a viable music streaming and subscription service as crucial to growing their presence in an exploding mobile environment. For Google and Apple, it is critical in ensuring users remain loyal to their mobile products.

Music has been integral to the mobile experience since the early days of iTunes, which upended the old models with its 99-cent-per-song buying approach.

Now, as smartphones and tablets supplant PCs and virtual storage replaces songs on devices, mobile players from handset makers to social networks realize they must stake out a place or risk ceding control of one of the largest components of mobile device usage.

At $9.99 a month, Google’s service is costlier than the $3.99 required for Pandora, but on par with Spotify.

Google executives said their new service takes the work out of managing massive music libraries, noting the streaming model can be endlessly customized. The company will also have a hand in music selection, acting as a curator of personalized content.

It was unclear how large the library will be for streaming. The Verge, a tech blog, reported on Tuesday that Google had signed deals with Universal Music and Sony Entertainment Group, two of the world’s largest record labels.

“You don’t dismiss Apple, you don’t dismiss anyone. But that is not the point,” said Rich Tullo, an analyst at Albert Fried & Co. “Pandora is the market share leader in the space and their platform is so disruptive — it’s very hard to disrupt them. When you have 70 million people use it – they are the disruptors.”

TWEAKS BIG AND SMALL

A procession of Google executives described and showed off a litany of new features and software updates at the annual “I/O” developers’ conference, from picture touch-ups on Google+ and re-designed Maps that spot when a user is walking or driving, to Star Trek-like voice-activated search that understands a users’ sentences and figures out what he or she is looking for.

“We haven’t seen this rate of change in computing for a long time — probably not since the birth of personal computing,” said CEO Larry Page, who began his address reflecting upon a significant moment in his life, when his father got him into a robotic science fair.

“We’re really only at 1 percent of what’s possible,” he said.

Google’s popular mapping service, a mainstay of Android devices, features tighter integration with reviews off Zagat, the popular dining-reviews brand that Google bought last year. It also sports more pictures from inside important buildings, sourced from user-uploaded photos. It can now even display the earth realistically as viewed from outer space, something Page said he personally requested.

Shares in Yelp Inc (YELP.N: Quote, Profile, Research), which like Zagat is built off users’ personal reviews, slid 3.8 percent to $29.80 in the afternoon.

Many of Wednesday’s updates are designed to enable Google’s products to work better on Android and other mobile platforms, and help its crucial community of developers craft the applications that are the mobile operating system’s lifeblood.

Executives said Wednesday that some 900 million smartphones and tablets running Google Android software had been activated since the platform’s inception in 2010.

(Editing by David Gregorio and Bernadette Baum)

With its new service, announced at its annual developers’ conference in San Francisco, Google has adopted the streaming music business model ahead of rival Apple Inc, which pioneered online music purchases with iTunes.

Google’s “All Access” service lets users customize song selections from 22 genres, ranging from Jazz to Indie music, stream individual playlists, or listen to a curated, radio-like stream that can be tweaked. It will be launched for U.S. users first, before being rolled out to several other countries.

Google shares jumped $18.90, or more than 2 percent, to $906. Pandora shares slipped 0.4 percent to $16.68 on the New York Stock Exchange.

The entry of the world’s largest Internet company amps up the competition as major technology giants jostle for position in the nascent market for subscription-based, streaming music.

Amazon.com Inc and Apple are among the Silicon Valley powerhouses sounding out top recording industry executives, according to sources with knowledge of talks and media reports.

Pandora is spending freely and racking up losses to expand globally. Even social media stalwarts Facebook and Twitter are jumping onto the streaming-music bandwagon.

All these companies see a viable music streaming and subscription service as crucial to growing their presence in an exploding mobile environment. For Google and Apple, it is critical in ensuring users remain loyal to their mobile products.

Music has been integral to the mobile experience since the early days of iTunes, which upended the old models with its 99-cent-per-song buying approach.

Now, as smartphones and tablets supplant PCs and virtual storage replaces songs on devices, mobile players from handset makers to social networks realize they must stake out a place or risk ceding control of one of the largest components of mobile device usage.

At $9.99 a month, the service is costlier than the $3.99 required for Pandora, but on par with Spotify.

Google executives argued their new service takes the work out of managing massive music libraries, in part because the streaming-model can be endlessly customized. The company will also have a hand in music selection, acting as a curator of personalized content.

It’s unclear how large the library will be for streaming. Tech blog, The Verge, reported Tuesday that Google had signed deals with Universal Music and Sony Entertainment Group, two of the world’s largest record labels.

TWEAKS BIG AND SMALL

The new music service was among the highlights of the company’s annual developers’ conference, a venue in the past for major hardware unveilings as well as important updates to Google’s family of software. On Wednesday, various executives described updates to everything from Google+, the company’s fledgling social network, to its gaming development platform.

Many of those updates are designed to enable Google’s products to work better on Android and other mobile platforms, and help its crucial community of developers craft the applications that are the mobile operating system’s lifeblood.

New features described on Wednesday ran the gamut from a new Google “Hangouts” video conferencing and messaging app, to better support for pictures and a redesign of the core “stream” that users first see on Google+.

Executives said Wednesday that some 900 million smartphones and tablets running Google Android software had been activated since the platform’s inception in 2010.

Revenue from Android, the software used by Samsung and other mobile device makers that competes with Apple, is also gaining momentum. Google executives said revenue per user for Android applications developers is now 2-1/2 times its year-earlier level.

Roughly 5,500 software developers are attending this year’s “Google I/O” convention at San Francisco’s Moscone Center from Wednesday through Friday.

(Editing by David Gregorio and Bernadette Baum)

With its new service, announced at its annual developers’ conference in San Francisco, Google has adopted the streaming music business model ahead of rival Apple Inc, which pioneered online music purchases with iTunes.

Google’s “All Access” service lets users customize song selections from 22 genres, ranging from Jazz to Indie music, stream individual playlists, or listen to a curated, radio-like stream that can be tweaked. It will be launched for U.S. users first, before being rolled out to several other countries.

Google shares jumped $18.90, or more than 2 percent, to $906. Pandora shares slipped 0.4 percent to $16.68 on the New York Stock Exchange.

The entry of the world’s largest Internet company amps up the competition as major technology giants jostle for position in the nascent market for subscription-based, streaming music.

Amazon.com Inc and Apple are among the Silicon Valley powerhouses sounding out top recording industry executives, according to sources with knowledge of talks and media reports.

Pandora is spending freely and racking up losses to expand globally. Even social media stalwarts Facebook and Twitter are jumping onto the streaming-music bandwagon.

All these companies see a viable music streaming and subscription service as crucial to growing their presence in an exploding mobile environment. For Google and Apple, it is critical in ensuring users remain loyal to their mobile products.

Music has been integral to the mobile experience since the early days of iTunes, which upended the old models with its 99-cent-per-song buying approach.

Now, as smartphones and tablets supplant PCs and virtual storage replaces songs on devices, mobile players from handset makers to social networks realize they must stake out a place or risk ceding control of one of the largest components of mobile device usage.

At $9.99 a month, the service is costlier than the $3.99 required for Pandora, but on par with Spotify.

Google executives argued their new service takes the work out of managing massive music libraries, in part because the streaming-model can be endlessly customized. The company will also have a hand in music selection, acting as a curator of personalized content.

It’s unclear how large the library will be for streaming. Tech blog, The Verge, reported Tuesday that Google had signed deals with Universal Music and Sony Entertainment Group, two of the world’s largest record labels.

TWEAKS BIG AND SMALL

The new music service was among the highlights of the company’s annual developers’ conference, a venue in the past for major hardware unveilings as well as important updates to Google’s family of software. On Wednesday, various executives described updates to everything from Google+, the company’s fledgling social network, to its gaming development platform.

Many of those updates are designed to enable Google’s products to work better on Android and other mobile platforms, and help its crucial community of developers craft the applications that are the mobile operating system’s lifeblood.

New features described on Wednesday ran the gamut from a new Google “Hangouts” video conferencing and messaging app, to better support for pictures and a redesign of the core “stream” that users first see on Google+.

Executives said Wednesday that some 900 million smartphones and tablets running Google Android software had been activated since the platform’s inception in 2010.

Revenue from Android, the software used by Samsung and other mobile device makers that competes with Apple, is also gaining momentum. Google executives said revenue per user for Android applications developers is now 2-1/2 times its year-earlier level.

Roughly 5,500 software developers are attending this year’s “Google I/O” convention at San Francisco’s Moscone Center from Wednesday through Friday.

(Editing by David Gregorio and Bernadette Baum)

With its new service, announced at its annual developers’ conference in San Francisco, Google has adopted the streaming music business model ahead of rival Apple Inc, which pioneered online music purchases with iTunes.

Google’s “All Access” service lets users customize song selections from 22 genres, ranging from Jazz to Indie music, stream individual playlists, or listen to a curated, radio-like stream that can be tweaked. It will be launched for U.S. users first, before being rolled out to several other countries.

Google shares jumped $18.90, or more than 2 percent, to $906. Pandora shares slipped 0.4 percent to $16.68 on the New York Stock Exchange.

The entry of the world’s largest Internet company amps up the competition as major technology giants jostle for position in the nascent market for subscription-based, streaming music.

Amazon.com Inc and Apple are among the Silicon Valley powerhouses sounding out top recording industry executives, according to sources with knowledge of talks and media reports.

Pandora is spending freely and racking up losses to expand globally. Even social media stalwarts Facebook and Twitter are jumping onto the streaming-music bandwagon.

All these companies see a viable music streaming and subscription service as crucial to growing their presence in an exploding mobile environment. For Google and Apple, it is critical in ensuring users remain loyal to their mobile products.

Music has been integral to the mobile experience since the early days of iTunes, which upended the old models with its 99-cent-per-song buying approach.

Now, as smartphones and tablets supplant PCs and virtual storage replaces songs on devices, mobile players from handset makers to social networks realize they must stake out a place or risk ceding control of one of the largest components of mobile device usage.

At $9.99 a month, the service is costlier than the $3.99 required for Pandora, but on par with Spotify.

Google executives argued their new service takes the work out of managing massive music libraries, in part because the streaming-model can be endlessly customized. The company will also have a hand in music selection, acting as a curator of personalized content.

It’s unclear how large the library will be for streaming. Tech blog, The Verge, reported Tuesday that Google had signed deals with Universal Music and Sony Entertainment Group, two of the world’s largest record labels.

TWEAKS BIG AND SMALL

The new music service was among the highlights of the company’s annual developers’ conference, a venue in the past for major hardware unveilings as well as important updates to Google’s family of software. On Wednesday, various executives described updates to everything from Google+, the company’s fledgling social network, to its gaming development platform.

Many of those updates are designed to enable Google’s products to work better on Android and other mobile platforms, and help its crucial community of developers craft the applications that are the mobile operating system’s lifeblood.

New features described on Wednesday ran the gamut from a new Google “Hangouts” video conferencing and messaging app, to better support for pictures and a redesign of the core “stream” that users first see on Google+.

Executives said Wednesday that some 900 million smartphones and tablets running Google Android software had been activated since the platform’s inception in 2010.

Revenue from Android, the software used by Samsung and other mobile device makers that competes with Apple, is also gaining momentum. Google executives said revenue per user for Android applications developers is now 2-1/2 times its year-earlier level.

Roughly 5,500 software developers are attending this year’s “Google I/O” convention at San Francisco’s Moscone Center from Wednesday through Friday.

(Editing by David Gregorio and Bernadette Baum)

The 40-year-old co-founder of the world’s No. 1 Internet search engine said that doctors have been unable to identify a cause for his “very rare” vocal cord issues, but that he has been making progress in his recovery and is “fully able to do all I need to at home and at work,” he wrote on his Google+ page on Tuesday.

He also noted that he had been diagnosed with Hashimoto’s thyroiditis in 2003, which he described as a “fairly common inflammatory condition of the thyroid which causes me no problems.” He said it was unclear if this is a factor in his vocal cord condition or if both conditions were triggered by a virus.

Page said he has arranged to fund a significant research program through the Voice Health Institute, which will be lead by one of the doctors that he has consulted for his condition.

Page, who co-founded Google with Sergey Brin in 1998, reclaimed the CEO title in April 2011 after a decade under the stewardship of Eric Schmidt. Google controls roughly two-thirds of the world’s search market and its Android smartphone operating system is the world’s most popular mobile software.

Google is due to hold its annual developer conference in San Francisco beginning on Wednesday. It is not clear if Page will speak at the event, which he did not speak at last year because of the voice condition.

Page said on Tuesday that he was diagnosed with left vocal cord paralysis about 14 years ago after suffering a bad cold, Page said.

“Fast forward to last summer, when the same pattern repeated itself — a cold followed by a hoarse voice,” Page said.

“Once again things didn’t fully improve, so I went in for a check-up and was told that my second vocal cord now had limited movement as well,” he explained.

Shares of Google, which have traded at all-time highs in recent weeks, were up 1.05 percent at $886.79.

(Reporting By Alexei Oreskovic; editing by Andrew Hay)

The struggling Web portal’s brand will be more visible on
outdoor billboards and at sporting events, among other places,
as it seeks to woo 18-to-34-year-olds and get the word out about
new products, CFO Ken Goldman said at the J.P. Morgan Global
Technology, Media and Telecom conference in Boston on Tuesday.

“Part of it is going to be just visibility again in making
ourselves cool, which we got away from for a couple of years,”
said Goldman.

He noted that the efforts will require spending to advertise
across various mediums. Goldman gave no specifics on budget or
expenditures.

Yahoo is trying to reverse a multi-year decline in revenue
and user engagement on its website, amid competition from new
social networking and mobile websites such as Facebook Inc
and Twitter, and from search giant Google Inc.

“One of our challenges is we have had an aging demographic,
if you will,” said Goldman.

Marissa Mayer, who became Yahoo’s chief executive in July,
was one of Google’s earliest employees and is respected in
technology circles for her online product-design expertise.
Since taking over, Mayer has launched new
versions of key products, such as Yahoo’s Web email and its
Flickr photo sharing service, and acquired several small
start-up companies.

Yahoo shares have surged roughly 70 percent since Mayer took
over, though analysts say much of the rise is due to stock
buybacks and the growing value of Yahoo’s Asian assets.

Goldman hinted that Yahoo could buy back more shares once
its current stock repurchase authorization is completed. He
added, however, that any future buybacks would depend on the
stock price.

“I do like the idea of buying back stock,” he said. “So I
don’t necessarily suggest at all that the fact that we’ve got a
little bit more to go on the existing purchase does not mean
that we would not go beyond that and buy more.”

Goldman said the company continues to explore the best
course of action for its 35 percent stake in Yahoo Japan,
including everything from working with the company more closely
to potentially selling the stake. He described Yahoo’s 2012 sale
of half of its 40 percent stake in Chinese Internet company
Alibaba Group as “unfortunate” and a result of
Yahoo’s unstable situation at the time.

Shares of Yahoo were up 1.4 percent at $26.75 on the Nasdaq
at midday on Tuesday.

Two years after introducing its social network, Google Inc(GOOG.O: Quote, Profile, Research) is struggling to win over the brands and businesses that have been its most loyal customers in the Internet search market.

For Google+ to thrive, it is vital to draw in household names, not just to lay the groundwork for potential future business, but also because users of the site have come to expect being able to follow, comment on or even vent about their favorite brands.

Progress has been slow. Rival services from Twitter to Amazon.com Inc(AMZN.O: Quote, Profile, Research) are increasingly competitive in vying for corporate attention and marketing budgets, while technical shortcomings of Google+ have put off some companies accustomed to the flexibility of Facebook(FB.O: Quote, Profile, Research), marketing and corporate executives say.

The biggest problem for Google+ is that many more consumers use Twitter and Facebook – and they log in to Facebook for much longer periods.

A Google spokeswoman said Google+ has been used by millions of brands and businesses, and that the benefit of the service extends beyond Google+ Web pages, by providing brands with social capabilities that enhance Google’s other products.

Google+, which was first introduced in June 2011, has roughly 135 million users that it says actively use its website news stream, and about 500 million that have set up Google+ accounts at some point, according to the company. Still, Facebook has 1.1 billion users who engage with the service at least once a month, while Twitter has 200 million.

The average U.S. visitor to Google+ spent 6 minutes 47 seconds on the site in March, versus more than 6 hours on Facebook.com, according to Nielsen Media Research, though the data does not include activity on the social networks’ mobile apps.

“The main reason we are more active on Facebook than Google+ is because that is where our customers and our target demographic are spending their time,” said Dave Gilboa, the co-founder of online eyewear company Warby Parker.

Many businesses do build outposts on Google+, eager to benefit from its integration with Google’s popular Internet search service. Some corporations have even used its online video feature for splashy product launches.

But the flurry of commercial activity common on other social networks – from restaurant promotions to movie trailers – is harder to spot on Google+, raising questions about its ability to rival Facebook or Twitter as a thriving online community.

Google does not provide detailed information on user activity. But the level of consumer engagement on other social services, such as Facebook, Twitter and Pinterest, is “orders of magnitude higher” than on Google+, Gilboa says.

Still, he noted that a key benefit of Google+ for Warby Parker is the way it adds social capabilities to other Google services, such as YouTube videos his company produces.

An informal survey by Reuters showed that of the 100 most valuable global brands in 2012 ranked by Millward Brown, a media research firm owned by ad giant WPP, 72 have a presence on Google+, compared with 87 on Facebook.

However, roughly 40 percent of the brands with pages on Google+ have either never posted any content, or do so infrequently. Seventeen brands, including Nike and Pepsi, had not posted to their Google+ page in more than a week.

The McDonald’s Google+ page did not have a single posting. A spokeswoman for the fast-food chain said only that the company was “not active” on Google+.

“In my personal network, I have very few people who are actively using Google+,” said Dan Nguyen-Tan, vice president of sales and marketing for San Francisco-based bicycle company Public Bikes, which does regular promotions on Facebook but has not created a Google+ page. “That could be a reason why I haven’t thought about it as an effective tool.”

CREATIVE CONSTRAINTS

Some also complain that Google+ is too restrictive a canvas.

Its profile pages are more limited than on Facebook or Twitter because they don’t support iFrame, a Web standard that allows multiple Web pages to be embedded within a main page.

“I don’t think that Google+ has enough creative options for brands to be able to marshal a lot of resources and activity around it,” said Vince Broady, the Chief Executive of Thismoment, which develops social marketing campaigns and Web pages for brands such as Coca Cola and Intel.

Gretchen Howard, Google’s director of global social solutions, said the company was working its way down a “wish list” of features that businesses have been asking for.

Over the past year, it has rolled out a tool that allows software developers to connect with a brand’s page, though that has so far been offered only to a limited group of partners.

That’s not to say Google+ hasn’t had its share of success stories.

Howard points to examples such as automaker Fiat’s launch of its new Panda car using “Hangout” video conferencing, and the 40,000-member baking community page created by chocolate company Cadbury. According to Google, more than 100 brands on its social network have amassed more than 1 million followers.

And Google’s search engine, the most popular in the world, is a big draw. Businesses who have registered with Google+ often get extra visibility in search results, with a portion of the results page displaying information from their Google+ profile.

Search ads that incorporate Google+ information – such as the number of users who follow a brand – have a 5 to 10 percent better click-through rate than regular search ads, said Howard.

“Right now, the value isn’t in the network itself, it’s in what it can do for the search results,” said Greg Finn, director of marketing at search engine optimization firm Cypress North.

Google has never articulated how, or even if, it intends to make money off its social network. But analysts say the goal is to prevent migration of Internet users to Facebook and other social networks, while improving its core search advertising business and possibly providing a new source of income.

While Google+ does not feature any ads now, Pivotal Research Group analyst Brian Wieser said attracting major brands could be the first step to an important, high-margin revenue source.

New ad space inside Google-owned websites is particularly valuable because it doesn’t need to share revenue, as Google must do when its network places ads on other websites.

“If you’re Google, you really want to have more owned and operated properties,” said Wieser. “That’s a wonderful, high-margin piece of inventory.”

Google+ is a means to that end, he said.

(Reporting By Alexei Oreskovic; Editing by Martin Howell and Gunna Dickson)

Two years after introducing its social network, Google Inc is struggling to win over the brands and businesses that have been its most loyal customers in the Internet search market.

For Google+ to thrive, it is vital to draw in household names, not just to lay the groundwork for potential future business, but also because users of the site have come to expect being able to follow, comment on or even vent about their favorite brands.

Progress has been slow. Rival services from Twitter to Amazon.com Inc are increasingly competitive in vying for corporate attention and marketing budgets, while technical shortcomings of Google+ have put off some companies accustomed to the flexibility of Facebook, marketing and corporate executives say.

The biggest problem for Google+ is that many more consumers use Twitter and Facebook – and they log in to Facebook for much longer periods.

A Google spokeswoman said Google+ has been used by millions of brands and businesses, and that the benefit of the service extends beyond Google+ Web pages, by providing brands with social capabilities that enhance Google’s other products.

Google+, which was first introduced in June 2011, has roughly 135 million users that it says actively use its website news stream, and about 500 million that have set up Google+ accounts at some point, according to the company. Still, Facebook has 1.1 billion users who engage with the service at least once a month, while Twitter has 200 million.

The average U.S. visitor to Google+ spent 6 minutes 47 seconds on the site in March, versus more than 6 hours on Facebook.com, according to Nielsen Media Research, though the data does not include activity on the social networks’ mobile apps.

“The main reason we are more active on Facebook than Google+ is because that is where our customers and our target demographic are spending their time,” said Dave Gilboa, the co-founder of online eyewear company Warby Parker.

Many businesses do build outposts on Google+, eager to benefit from its integration with Google’s popular Internet search service. Some corporations have even used its online video feature for splashy product launches.

But the flurry of commercial activity common on other social networks – from restaurant promotions to movie trailers – is harder to spot on Google+, raising questions about its ability to rival Facebook or Twitter as a thriving online community.

Google does not provide detailed information on user activity. But the level of consumer engagement on other social services, such as Facebook, Twitter and Pinterest, is “orders of magnitude higher” than on Google+, Gilboa says.

Still, he noted that a key benefit of Google+ for Warby Parker is the way it adds social capabilities to other Google services, such as YouTube videos his company produces.

An informal survey by Reuters showed that of the 100 most valuable global brands in 2012 ranked by Millward Brown, a media research firm owned by ad giant WPP, 72 have a presence on Google+, compared with 87 on Facebook.

However, roughly 40 percent of the brands with pages on Google+ have either never posted any content, or do so infrequently. Seventeen brands, including Nike and Pepsi, had not posted to their Google+ page in more than a week.

The McDonald’s Google+ page did not have a single posting. A spokeswoman for the fast-food chain said only that the company was “not active” on Google+.

“In my personal network, I have very few people who are actively using Google+,” said Dan Nguyen-Tan, vice president of sales and marketing for San Francisco-based bicycle company Public Bikes, which does regular promotions on Facebook but has not created a Google+ page. “That could be a reason why I haven’t thought about it as an effective tool.”

CREATIVE CONSTRAINTS

Some also complain that Google+ is too restrictive a canvas.

Its profile pages are more limited than on Facebook or Twitter because they don’t support iFrame, a Web standard that allows multiple Web pages to be embedded within a main page.

“I don’t think that Google+ has enough creative options for brands to be able to marshal a lot of resources and activity around it,” said Vince Broady, the Chief Executive of Thismoment, which develops social marketing campaigns and Web pages for brands such as Coca Cola and Intel.

Gretchen Howard, Google’s director of global social solutions, said the company was working its way down a “wish list” of features that businesses have been asking for.

Over the past year, it has rolled out a tool that allows software developers to connect with a brand’s page, though that has so far been offered only to a limited group of partners.

That’s not to say Google+ hasn’t had its share of success stories.

Howard points to examples such as automaker Fiat’s launch of its new Panda car using “Hangout” video conferencing, and the 40,000-member baking community page created by chocolate company Cadbury. According to Google, more than 100 brands on its social network have amassed more than 1 million followers.

And Google’s search engine, the most popular in the world, is a big draw. Businesses who have registered with Google+ often get extra visibility in search results, with a portion of the results page displaying information from their Google+ profile.

Search ads that incorporate Google+ information – such as the number of users who follow a brand – have a 5 to 10 percent better click-through rate than regular search ads, said Howard.

“Right now, the value isn’t in the network itself, it’s in what it can do for the search results,” said Greg Finn, director of marketing at search engine optimization firm Cypress North.

Google has never articulated how, or even if, it intends to make money off its social network. But analysts say the goal is to prevent migration of Internet users to Facebook and other social networks, while improving its core search advertising business and possibly providing a new source of income.

While Google+ does not feature any ads now, Pivotal Research Group analyst Brian Wieser said attracting major brands could be the first step to an important, high-margin revenue source.

New ad space inside Google-owned websites is particularly valuable because it doesn’t need to share revenue, as Google must do when its network places ads on other websites.

“If you’re Google, you really want to have more owned and operated properties,” said Wieser. “That’s a wonderful, high-margin piece of inventory.”

Google+ is a means to that end, he said.

(Reporting By Alexei Oreskovic; Editing by Martin Howell and Gunna Dickson)