Yahoo!’s Right Media Buy Fuels Ambitions

NEW YORK Yahoo! said it would pay out $680 million to buy the 80 percent of Right Media it doesn’t own, in a move that checks Google’s recent purchase of DoubleClick.

The deal will bring to Yahoo! the Right Media Exchange, a platform that brings together buyers and sellers of online advertising. The half-stock, half-cash purchase sets up the development of multiple, competing exchanges for publishers and advertisers online, allowing them to run both search and display campaigns across many sites.

“We will have an open exchange for buying and selling inventory that will help us realize the full value for Yahoo!’s own inventory and our partners,” Yahoo! CEO Terry Semel said in a conference call.

Yahoo! plans to begin committing more of its own non-premium, or remnant, ad inventory to the exchange, with an eye to running all of it through it.

Right Media already has 1,000 publisher participants, with 6 billion transactions per day. Yahoo! will sweeten the deal for publishers by allowing them to run campaigns that reach users on Yahoo!.

The purchase price shows the breakneck competition between Google, Yahoo! and Microsoft for developing wide-ranging ad platforms. Google trumped Microsoft’s $2 billion bid for DoubleClick by adding $1 billion. Yahoo! bought 20 percent of Right Media in October 2006, when it valued it at $200 million. The acquisition deal carries a valuation of $850 million.

“The big boys are getting bigger in an effort to simplify the digital marketplace for advertisers,” said Bryan Wiener, president of 360i, a New
York-based digital agency.

Sue Decker, head of Yahoo!’s publisher and advertiser group, explained that the original valuation was based on Right Media’s standalone business. Yahoo then learned the more significant value lay in using Right Media to get higher prices for Yahoo!’s remnant inventory and developing the platform to make it easy for advertisers to reach audiences across the Internet.

Figuring out a way to combine behavioral data, from both Yahoo! and other sites, will make the exchange even more powerful, Decker said.

“Our opportunity over time is to work on how we can submit some of targeting information to the exchange,” she said.