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Advertising - Monday, April 30, 2007

Yahoo Goes Yard. Pays $680M For Rest of Right Media

Yahoo has acquired online advertising exchange Right Media for $680M in stock and cash. Yahoo had originally acquired a 20% ownership in Right Media, by leading a $45M Series B round last fall that also included existing Right Media shareholder Redpoint Ventures.

For Yahoo, it must feel good to own an ad platform that it out in front of Google. Google has purchased DoubleClick which plans to roll-out an online ad exchange to compete with Right Media but Right Media has been in business for 4 years already.

We don't know at this point what are RightMedia's revenues. Here is our read on Yahoo's statements on the deal:

+ Yahoo's Susan Decker said that Yahoo's first priority was to maintain the independence of the exchange for advertisers and publishers.

Now that both Yahoo and Google own the what may be the two most important ad exchanges, both are open to suspicions from advertisers and publishers that they are pawns.

+ Yahoo said it wanted to own Right Media Outright as a way to take a leadership role in promoting the exchange model and provide Right Media with the resources and access to Yahoo Ad inventory that would help it expand.

Despite owning part of Right Media previously, Yahoo is saying that it was not fully on-board. Why not? Probably because Yahoo has been rolling out Panama and to some extent Right Media would steal from Panama's thunder as its another way for ad buyers to purchase Yahoo inventory. It also competes for mind-share with the Yahoo Publisher Network.

+ Ms. Decker said that significant growht in user-generated content on the Web was a factor behind he growth of the exchanges.

Yahoo does not own a large social network like MySpace but now says it can participate in this field by owning a network that sells ads here.

Read - Yahoo to Buy Ad Company in Bid to Compete With Google (NY Times)

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