Posted April 30, 2007 9:53 am by with 9 comments

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After investing in online advertising company Right Media, in October (and getting 20% of the company in the process), Yahoo has now shelled out $680 million to secure the remaining 80%.

In a move that many suspected and most see as an answer to Google’s acquisition of DoubleClick, Yahoo’s acquisition of Right Media will strongly boost the companies online display advertising options.

“The acquisition of Right Media will further Yahoo!’s goal to create the industry’s most open, accessible and vibrant advertising marketplace, which will help democratize the buying and selling of digitally enabled advertising,” said Terry Semel, chairman and CEO of Yahoo!, in a statement. “This acquisition is an important step in our long-term vision to build the industry’s leading advertising and publisher ecosystem. We believe that Yahoo!’s open approach is a clear differentiator from others in the industry and provides significant benefits to advertisers, publishers and Yahoo! itself.”

Before the acquisition, Yahoo’s display advertising had been mostly confined to its own network of properties. With Right Media’s open exchange model, Yahoo will combine its content with many other third-party offerings, providing an expansive network for publishers and advertisers to buy and sell online ad placements in a real time auction system.

Here’s what Yahoo is promising will come from the acquisition:

  • Advertisers will have greater inventory and audience options from Yahoo! and other participants in this exchange, as well as increased control and visibility into the buying process.
  • Publishers will be able to bundle their own ad inventory with Yahoo!’s inventory and the exchange’s inventory – thereby boosting demand and generating the highest returns for each ad placement.
  • Advertising networks will reap the same benefits as advertisers and publishers, and additionally, the exchange will benefit those ad networks with unique value propositions, giving them an opportunity to compete with the largest players, thanks to reduced friction and increased transparency.
  • For Yahoo!, this more open approach will allow the company to increase liquidity, allow advertisers to more efficiently ascertain the true value of display ad inventory, and generate greater returns for Yahoo!’s own display inventory. It will give Yahoo! a new channel and inventory for excess demand and provide an opportunity to derive more value from non-premium inventory.

The deal is a mixture of stock and cash and is expected to close within 3 months.

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