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April 30, 2007

Yahoo! Acquires the Rest of Right Media

Concluding a story first published here as a rumor from ad|tech on Thursday April 26, Yahoo! has announced it will purchase the remaining 80% of the Right Media Exchange for approximately $680mm in cash and stocks.  Yahoo! had already taken a 20% stake in the company with a strategic investment in Right Media in October 2006.

Based in New York City, Right Media is the largest emerging online advertising exchange. By brokering advertising across the tens of thousands of publisher sites associated with the exchange, Right Media helps publishers monetize their ad inventories and webmasters monetize their sites. Founded four years ago, Right Media uses an open auction system which allows publishers and advertisers sell and purchase online ad placements in real time.

“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 press release. “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.”

As the largest online publisher with one of the largest ad networks Yahoo! will increase both the distribution power and inventory depth of the Right Media Exchange.

“What we look forward to do as an owner is put more inventory into that pot to help create a more vibrant exchange and create better pricing for everyone,” said Semel.

According to the press release from Yahoo!,

  • 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.

“Right Media will be the crown jewel in Yahoo!’s battle against Google,” said Leron Cohen, founder of Quired Media, an ad broker working through the Right Media Exchange. “For us, this is good news. I hope Right Media sticks to being the open and fair marketplace that has made it (and us) so successful over the years.”

CEO and founder of Right Media, Michael Walrath added, “We share Yahoo!’s vision of a more empowered marketplace, where efficiency, transparency and accountability in online advertising become the norm. We are very excited by the prospect of becoming part of Yahoo!, the market leader in display advertising, as it looks to revolutionize the media buying and selling landscape.” 

In an open letter to Right Media advertisers and publishers, Walrath writes, “It’s important to reiterate publicly that the acquisition will in no way afford Yahoo! any unfair advantage in the Exchange. A level playing field is one of the foundations of the Exchange and its success–it remains level. The fact that the Right Media Exchange will operate as an independent division of Yahoo! ensures this.”

Yahoo! plans to sell all non-premium ad space on Yahoo! through the exchange.

While many in the industry will see the purchase as a reaction to Google’s pending acquisition of Double Click, Yahoo! had already started the process in the autumn of 2006. Google’s entry into the display market merely accelerated what appears to have been planned for some time.

“Yahoo! is the largest online publisher and one of the leading ad networks on the web, and we believe it is in our strong financial interest to make sure there is a widely adopted, neutral, frictionless exchange that enables publishers and advertisers to benefit from a basket of the best solutions rather than having to accept a single solution from one of the larger players,” said Susan Decker, head of advertiser and publisher group and CFO of Yahoo!. “Furthermore, as the industry’s partner of choice and as a leader in both search and display advertising, we believe that we are well-positioned to rally the industry support to make the promise of Right Media a reality for the entire digital media community.”

Yahoo! will host a conference call to discuss the deal at 11AM eastern time today. A live webcast of the conference call can be accessed through the Company’s Investor Relations website at http://yhoo.client.shareholder.com/mediaRegister.cfm?MediaID=25393. In addition, an archive of the webcast can be accessed through the same link.

Author:  Jim Hedger is the Executive Editor of SiteProNews.com.

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