Yahoo to Buy Online Advertising Exchange
By Elise Ackerman, San Jose Mercury News, Calif.
Apr. 30–Yahoo announced Monday that it is acquiring Right Media, an online advertising exchange, for $680 million.
The deal helps positions Yahoo to more effectively compete with Google, which bought a nascent online advertising exchange when it agreed to acquire DoubleClick for $3.1 billion two weeks ago.
Yahoo CEO Terry Semel described the deal as “the third leg” of Yahoo’s three-part strategy to strengthen its position in online advertising by reorganizing its internal structure, partnering with large media and Internet companies like eBay and sponsoring an open exchange where advertising space belonging to any online publisher can be bought and sold.
“This acquisition is an important step in our long-term vision to build the industry’s leading advertising and publisher ecosystem,” Semel said in a conference call with Wall Street analysts. Semel also suggested that Yahoo is on the brink of announcing additional industry partnerships.
Last year, Yahoo announced it would sell display advertising to run on eBay’s auction site. Yahoo is also selling online advertising for a consortium of 12 newspaper companies, including MediaNews, the owner of the Mercury News.
“You are going to see more of that real soon,” Semel said, referring to the advertising partnerships.
Wall Street analysts said Yahoo’s acquisition of Right Media was expected. Yahoo bought a 20 percent stake in Right Media last October, valuing the company at $200 million.
In a research note on Monday morning, Doug Anmuth, an analyst at Lehman Brothers, said Google’s bid for DoubleClick could account for the dramatic increase in Right Media’s value during the last six months. DoubleClick is launching an advertising exchange that could compete with Right Media.
Sue Decker, Yahoo’s chief financial officer and head of the advertiser and publisher group, said the acquisition of Right Media was structured to be half cash and half stock in an effort to make the deal “tax free.”
Decker said Right Media is expected to more than double its revenue this year to $70 million and to become profitable. Founded in 2003, Right Media currently has 20,000 buyers and sellers participating in its exchange and generating about 4 billion impressions a day.
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