Yahoo To Acquire Right Media; Joins Google In Buying, Rather Than Building, Display Ad Network

Yahoo has announced it will acquire Right Media, which operates an auction-based display ad exchange called Remix Media. The move is widely seen as Yahoo fighting back against Google’s recent plans to acquire DoubleClick, which itself is seen as Google jumping more firmly into the display ad network game. Both moves to me underscore how neither players’ own existing ad networks have apparently been good enough for their display ambitions.

Google has a massive ad network through AdSense. But that’s not display! Yes, it is.

AdSense has been offering display advertising since May 2004. That’s when advertisers were allowed to provide images and other display units that AdSense publishers could choose to carry. It refined this to allow "site targeting" on a CPM basis, back in June 2005. Those looking to push a branding message could buy impressions, rather than clicks, and have them hit particular sites (ironically, CPC and CPA pricing were both recently introduced). In November, Google made it easier for publishers to define "channels" to be targeted within their sites.

So why’s Google acquiring DoubleClick if it already has a display ad network? Good question.

In part, some see the answer as DoubleClick’s already huge base of customers, which use the company primarily as a means to serve ads on other sites, rather than to make those actual purchases. In addition, DoubleClick recently launched the DoubleClick Ad Exchange. That really is meant to be just what it says, an actual ad exchange network that DoubleClick controls. That exchange wasn’t even yet proven, but fear of Microsoft getting it and getting a step-up into the display ad network space seems to be another primary reason behind Google’s move.

Those are some good reasons, but if AdSense had been tapping into display into the way Google wanted it to, DoubleClick shouldn’t have been as necessary to Google. Apparently, it wasn’t. So as with buying YouTube when Google Video failed to win in the video space, Google seems to be tossing in the towel on AdSense being enough to win in the display ad space. That will likely include scraping the Google Display Advertising Network that it was said to be running, though Google spun when news came out of about this last November that it wasn’t a new ad network.

If Google has been weak in display, Yahoo was supposedly strong there. Or so we were told, especially by Yahoo over the years. But last year, Yahoo reported earnings hurt by a downturn in spending from auto and financial advertisers (big display buyers), and just this month, financial analysts have worried that Yahoo’s display ad growth is weakening.

Yahoo’s display network, of course, has been largely restricted to Yahoo’s own properties. Yahoo’s own properties have huge amounts of traffic, but Citigroup warned back in September that Yahoo’s collection of web properties were going to fall behind Google’s in traffic. That happened by at least February 2007, according to comScore figures – though it wasn’t much commented on. Instead, it was Google’s leaping past Microsoft to take the number one spot for having the most popular collection of web properties in the world that picked up headlines.

If Yahoo’s own network of properties is slipping, how about tapping into the web as a whole? The Yahoo Publisher Network was introduced back in August 2005 as a way to do this, as well as to rival Google AdSense. However, unlike AdSense, it remains a fairly closed beta program (you can’t immediately sign-up and start running ads — you have to be approved). In addition, it doesn’t offer any display ads, only contextual placement.

Potentially, YPN could have let Yahoo grow display ads beyond the Yahoo network of properties themselves. Instead, Yahoo’s gone the Right Media route. It purchased 20 percent of the ad network last October. The exact amount wasn’t disclosed, but the overall financing round raised $45 million — so that would be a top line figure.

Today’s move gives Yahoo the rest of the company for $680 million split between cash and stock. Yahoo CEO Terry Semel blogs a bit more that this is a democratic move for ad sales:

We think supply and demand should be regulated by the marketplace, not a closed platform. Right Media provides a democratic model that empowers advertisers with all of these benefits. We think our open approach is a clear differentiator from others in the industry and will provide significant benefits to publishers and advertisers.

Excellent. I’m not familiar with Right Media purchasing, but I trust their will be no minimum CPMs set in this new democratic system? And if arbitragers figure out how to make more off the ads even if the quality of their traffic isn’t so great, Yahoo will let the marketplace set that demand? Heh. I’m sure democracy in the system, if not already regulated, will be to some degree. Let’s not get too starry eyed here.

Right Media also blogged about the planned purchase. Right Media’s Big Ambitions from BusinessWeek is a fresh look at Right Media overall from March, for those looking for greater background on the company. See also discussion across the blogosphere on the purchase via Techmeme.

Related Topics: Channel: Display | Google: Acquisitions | Google: AdSense | Google: General | Google: Other Ads | Yahoo: Business Issues | Yahoo: Display Ads | Yahoo: General

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About The Author: is a Founding Editor of Search Engine Land. He’s a widely cited authority on search engines and search marketing issues who has covered the space since 1996. Danny also serves as Chief Content Officer for Third Door Media, which publishes Search Engine Land and produces the SMX: Search Marketing Expo conference series. He has a personal blog called Daggle (and keeps his disclosures page there). He can be found on Facebook, Google + and microblogs on Twitter as @dannysullivan.

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  • http://www.lyricsrec.com/lyrics/b.php vsd 32

    It’s strange for me to hear that: Yahoo’s display ad growth is weakening
    :(

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