Yahoo! Inc. has been buying up many companies such as Flickr, Del.icio.us and Upcoming, a user-generated social events calendar, in the last 18 months and sees to use acquisitions as part of its strategy, reported Business Week.

Analysts say the acquisitions are also likely to pay off financially through ads.

"If you take these smaller brands and you plug them into the Yahoo ad infrastructure, they should quickly increase the ad revenue for them," Todd Dagres, general partner at Boston's Spark Capital told Business Week.

eMarketer reports that U.S. ad spending on social networking sites such as Flickr and MySpace will increase from $280 million this year to $1.9 billion by 2010.

The search giant is also said to be in talks to acquire social networking site Facebook for a sum near $1 billion.

Last week Yahoo announced it had also bought video-sharing site JumpCut.