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Yahoo! agrees to buy online ad network BlueLithium

California Internet services company Yahoo Inc. said on Tuesday that it has agreed to buy BlueLithium, an online advertising network, for about $300 million in cash, in a move that will help Internet giant expand its ad reach beyond its own sites.

By combining the San Jose, California-based BlueLithium's assets and relationships with Yahoo!’s advertising, product, and engineering roadmaps will give advertisers and publishers access to powerful data analytics, advanced targeting as well as high quality inventory and the essential targeting, asserts Yahoo!, the world's largest global online network of integrated services.

“The combination of BlueLithium's network and Yahoo's engaged audience will provide an unprecedented buying opportunity across what we believe will be one of the world's leading online display ad networks,” said Susan Decker, president, Yahoo!.

The acquisition of fifth-largest US online advertising network BlueLithium also gives Sunnyvale, California-based Internet information provider Yahoo! a boost in performance-based marketing, which allows advertisers to pay only when a user takes a certain action, such as clicking an ad, filling out a form, or buying something.

The addition of BlueLithium further enables the Internet titan to sell and measure performance-based campaigns both on and off the Yahoo!’s owned and operated properties, including Yahoo! Publisher Network, and the Right Media Exchange.

The transaction, which the two companies expect to close in the fourth quarter of 2007, is still subject to customary closing conditions, and requires regulatory approval.

After the completion of acquisition, BlueLithium will operate as a wholly owned subsidiary of Yahoo. BlueLithium founder Gurbaksh Chahal, who is also the Chairman and Chief Executive Officer of the company, will remain with newly formed unit for an interim period through the integration.

The online advertising arena has been recognized by players in the industry as a multi-billion dollar playground. Rivalries are heating up as different players make their bid to stake claim to the larger share of the pie.

The latest purchase follows a string of online-ad acquisitions done in last few months by Internet majors, including Yahoo and its arch-rivals Google Inc. and Microsoft Corp. in attempts to grow their advertising capabilities.

In July, Yahoo acquired the remaining equity interest in Right Media Inc., creator of the Right Media Exchange, for about $650 million. It bought a 20 percent stake in the New York-based privately held company that runs an advertising marketplace last October.

In June, the online advertising and internet search giant, Google announced that it has acquired FeedBurner, a Chicago-based privately-held company that provides media distribution and audience engagement services for blogs and RSS feeds. The move came as part of Internet powerhouse’s immense efforts to expand itself in the advertising section and capture a bigger share of online advertising.

In April, Google announced to buy the Web advertising tools provider DoubleClick Inc. for $3.1 billion, in order to pace up its push into the graphic ad market by acquiring the software for creating and assessing Internet advertising campaigns.

Likewise, in May Microsoft said it agreed to buy online-ad company aQuantive for $66.50 per share or $6 billion, making it the largest acquisition in Microsoft's history. In July, Microsoft agreed to acquire privately held advertising exchange platform company AdECN Inc. for an undisclosed amount.

Started by two Stanford graduates– Jerry Yang and David Filo in 1994, and incorporated in 1995, the Sunnyvale, California-based Internet titan Yahoo! is the largest and most comprehensive information portal on the Web.

Founded in January 2004, BlueLithium is the operator of an online-advertising network, reaching 66 percent of Internet users. It is the leading data driven performance marketing company that uses data from 145 million consumers worldwide.