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Yahoo’s latest buy heats up online game

áYahoo last week announced its latest move in an ongoing acquisition battle to dominate the Internet advertising market.

The publisher struck a deal to buy BlueLithium, the fifth-largest US online advertising network, for $300 million in cash – a deal that expands Yahoo’s share of the display and advertising market to include an additional 145 million unique visitors per month.

“This is an important acquisition for us because it is a key component of Yahoo’s efforts to lead the transformation of how advertisers and publishers connect to and engage with their customers – both on and off the Yahoo network,” said Todd Teresi, SVP of the Yahoo Publisher Network.

“This deal is the logical next step towards Yahoo’s goal of creating the largest and most effective online ad network globally,” Teresi continued.

“This was a move that Yahoo had to make to stay competitive with Google and MSN,” said Martin Laetsch, senior director of search strategy at SEMDirector.

“Since both companies have purchased ad networks recently, Yahoo has been limited to its own properties and a fairly small publisher network plus the Right Media exchange,” he said. “This acquisition will enable Yahoo to maintain its role as a key player in the online advertising space.”

The deal also may enable Yahoo to accelerate its advertising, product and engineering roadmaps by integrating the BlueLithium and Yahoo engineering teams.

“This move should significantly improve Yahoo’s behavioral ad targeting effectiveness on Yahoo properties, but also on its publisher network and the Right Media exchange by giving Yahoo a much broader set of data to work from,” Laetsch said.

Combining BlueLithium’s assets and relationships with Yahoo’s overall ad network will give advertisers access to powerful data analytics, advanced targeting, and innovative direct-response buying strategies across a broad range of high

quality inventory.

BlueLithium’s product capabilities include audience targeting based on consumer interests, remarketing ads to consumers across the Web who have interacted with an ad or Web page, custom segmentation, and spot-buying capabilities, which can extend reach and frequency against a marketer’s target audience.

Enhancing ad sales services

Publishers will have greater access to advertising budgets through Yahoo’s sales force and through the Right Media exchange, where BlueLithium will be an active participant.

Additionally, BlueLithium provides media buying expertise that is complementary to the Yahoo Publisher Network, enabling Yahoo to further extend its reach and frequency of the quality audience it says advertisers have come to expect.

“It appears that Yahoo is pushing front and center for the direct performance marketer by its acquisition of Blue Lithium,” said Mark Simon, vice president of industry relations at Didit Search Marketing.

“This will allow Yahoo to enhance its frequency through the network and put behavioral targeting to work for its advertisers,” Simon continued. “Blue Lithium, in addition to the Right Media Exchange, will strengthen Yahoo’s position for placement options and frequency availability.”

Smart ad growth

Laetsch added this deal is a good way for Yahoo to expand its SmartAds beyond the Yahoo properties.

SEMDirector expects to see a significant acceleration of the SmartAds roadmap and rapid expansion to the BlueLithium network.

“BlueLithium will enable Yahoo to accelerate its advertiser, product and engineering roadmaps. We’ve been focused on a variety of advertiser-related initiatives, but BlueLithium will help us to immediately address current advertising solution gaps in performance marketing and provide marketing tools to better manage the Yahoo ad network,” Teresi said. “Additionally, BlueLithium provides Yahoo with scalable re-targeting and behavioral products that will be leveraged both on- and off-network inventory to give advertisers the best opportunity to maximize performance.”

BlueLithium will become a wholly owned subsidiary of Yahoo. CEO Gurbaksh Chahal will remain with BlueLithium for an interim period through the integration. The transaction is subject to customary closing conditions, including regulatory approval. It is expected the transaction will be completed in the fourth quarter of 2007.

Online ad battle rages

This deal comes on the heels of several similar acquisitions.

The big three search engines – Google, MSN and Yahoo – have been scooping up digital assets to boost each of their advertising arsenals.

Google announced in April its intent to purchase ad network DoubleClick. Its goal is to add the ability to serve, track and auction online display ads to its already formidable advertising options, creating a massive online marketing service.

Yahoo’s Right Media purchase on May 11, to acquire the remaining 80 percent equity interest in Right Media for $680 million, is another example.

Microsoft, earlier this year, announced its purchase of aQuantive, an Internet-marketing firm whose properties include the Atlas Media Console toolset and interactive ad agency Avenue A/Razorfish.

The deal was announced in May, and the acquisition was completed in August. A new umbrella group was created within Microsoft. The Advertiser and Publisher Solutions Group now houses all of its ad platforms.

No one from, Google, Microsoft and their recently acquired companies returned calls for comment by press time.

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