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April 30, 2007

Yahoo Buys Right Media, Microsoft Picks Flowers

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Yahoo announced today that it will follow up last year’s 20 percent investment in Right Media buy acquiring the remaining 80 percent. The reported buying price? $680 million. Sweet.

Naturally, there’s lots of talk that this is Yahoo’s response to Google’s DoubleClick acquisition, and that may be, but it does more than that. It differentiates Yahoo from Google. For those of you busy preparing your bomb shelters like our friend Michael Gray, this gives you another advertising option. You don’t have to ride the Google train. It does make stops and you can get off.

Michael, are you listening? Get off the train. :)

Matt Marshall from Venture Beat accurately explains why this is a notable deal for Yahoo.

"Right Media is notable because it is an ad exchange, where buyers of Internet ads (publishers) and sellers (advertisers) can find each other and negotiate prices with the efficiency created by a large marketplace. This is significant because it is more transparent than Google’s platform for publishers, Adsense – and could therefore give Yahoo a small advantage in its battle against the Google juggernaut."

Yahoo’s aiming at Google’s Achilles heel – increased transparency for advertisers and publishers. It gives Yahoo a leg to stand on when trying to convert Google advertisers/publishers. They’re betting on advertisers hearing those two little words "increased transparency" (okay, maybe they’re not so little), yelling "Huzzah!", and switching over, or at least trying it out. With this deal, Yahoo has bought a nice complement to AdSense, established an auction-based market for Yahoo’s ad inventory and has grown their ads beyond their own advertising network.

Terry Semel outlined some other key benefits:

  • 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.

I don’t know that the bigger advertisers will be excited about this Right Media deal. It’s not a stretch to think they’re not going to be interested in negotiating prices. However, Yahoo can still serve them through Panama. This just presents another dimension to that.

For me, this deal is super important for two reasons:

First, it had to be made or Yahoo was about to become a Google client. Yes, Yahoo is a DoubleClick customer. That little deal Google just made would have essentially put Yahoo under Google’s non-evil little thumb. I’m thinking Yahoo didn’t want that to happen. As John Paczkowski notes, by purchasing Right Media, Yahoo gives itself a DoubleClick exit strategy and some talking points with which to disparage it. This was essential for Yahoo.

The second reason I’m amp’d about this deal is because at least Yahoo did something. They’re fighting back.
My biggest problem with Microsoft lately is they’re not doing anything. While they were playing with Ms Dewey, they allowed Google to purchase DoubleClick and then they merely whined about it. Lately, it seems like they’re not even paying attention. MarketingDrone very eloquently commented on this a few weeks back:

"Seriously, though: When was the last time Microsoft did something that shocked you? Not something that made you curse, like changing the HTML rendering engine for Outlook 2007 from IE to Word $%&*!!. I mean something that made you swear, like when those kids in Boston beat up Moby. Ok maybe that wasn’t nice."

(The Boston/Moby reference puts MarketingDrone in my heart forever.)

Language aside, Google bought DoubleClick and people were shocked. It was all they could talk about on the flight back from Search Engine Strategies New York. Yahoo hasn’t necessarily shocked us recently, but they have impressed us. You can see the gears turning — they’ve launched a new branding strategy, they’re making great strides in mobile (OneSearch is seriously cool) and now they’ve just put the bow on last years Right Media investment. They’re moving forward.

What is Microsoft doing? They made a couple changes to adCenter. Anything else? Google acted, Yahoo reacted and Microsoft is still picking flowers in the outfield.

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One response to “Yahoo Buys Right Media, Microsoft Picks Flowers”

  1. handsome rob writes:

    MS just bought 24/7 RealMedia. It would appear they listen to us, which is always smart. What is it they say about great minds?



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