Yahoo seeking partners for ads
Openness is the yin to Jerry Yang’s Yahoo.
For its first decade, Yahoo Inc. grew by attracting more and more people to its stable of websites. Now, with its co-founder and new chief executive at the helm, it’s reaching out to find advertising opportunities elsewhere on the Web.
Under Yang, Yahoo is crafting a series of partnerships and deals designed to reinvigorate the Sunnyvale, Calif.-based company, which has been beset in recent years by sluggish financial growth and strategic fumbles.
The latest deal is an exclusive agreement to sell advertising on Bebo in Britain and Ireland, where the social networking site leads the market with 11.6 million members.
The deal is part of Yahoo’s aggressive strategy -- one that Google Inc. has already used to great effect -- to seek more revenue outside of its own corporate constellation in a bid to become a dominant online advertising network.
“These are very sound strategic moves,” Standard & Poor’s analyst Scott Kessler said. “Whether or not it’s too little, too late is unclear.”
Yahoo has taken significant steps this year to boost its ability to deliver ads to other sites. It bought an online ad exchange, Right Media Inc., for $680 million and said it planned to buy direct marketing network BlueLithium for $300 million. Yahoo also has forged partnerships with hundreds of U.S. newspapers, EBay Inc. and cable television operator Comcast Corp. to broker ads for their websites.
These maneuvers are intended to counter growing competition. Microsoft Corp. recently paid $6 billion for online ad service AQuantive Inc. Google is vying to buy another one, DoubleClick Inc., for $3.1 billion, in a deal that’s being closely scrutinized by federal regulators.
Google has a commanding lead, with a vast network of partner websites that display the ads it brokers in exchange for a cut of the revenue. The only way for Yahoo to compete is to build better advertising systems and networks to draw more advertisers, analysts say.
Yahoo, which has struggled to attract users to its social networking site, Yahoo 360, has weathered heavy criticism for missing out on advertising partnerships with social networking leaders MySpace and Facebook.
Google sells ads for News Corp.’s MySpace, and Microsoft nabbed Facebook as a partner.
But the right to sell ads on a fast-growing social network can be expensive. Google outbid its competitors for the MySpace deal, guaranteeing News Corp. at least $900 million in cash through 2010 regardless of how lucrative the ads turn out to be.
Yahoo and Bebo declined to reveal financial details of their deal, as did Microsoft and Facebook.
Social networking sites -- wildly popular destinations for college students and other young adults -- are drawing increased interest from advertisers, which are searching for better ways to target that elusive demographic.
A late bloomer among social networking sites, Bebo has gained ground, particularly in Britain, Ireland and New Zealand. It launched KateModern, a Web-video spinoff of Lonelygirl15, this summer and announced last week that it would team with Sony to promote another online serial, Sofia’s Diary.
Bebo CEO Michael Birch said the partnership would give the 2-year-old San Francisco-based company the opportunity to focus on building momentum rather than on generating revenue. He denied earlier reports that Yahoo had engaged in takeover talks with Bebo.
Blake Chandlee, media sales director with Yahoo in Britain, said Bebo would help broaden Yahoo’s appeal with advertisers looking to connect with a younger audience. Yahoo is honing its ability to deliver advertising that matches a specific user’s interests and activities so ads will complement, rather than disrupt, the social networking experience, Chandlee said.
Bebo also plans to extend the Yahoo brand to a wider, younger audience. This year Bebo will integrate Yahoo Answers, the user-powered knowledge service, and the two companies will develop a Bebo tool bar that allows users to monitor their accounts when they are not on the site.
Yahoo also renewed its deal to supply search results for Bebo.
The Internet giant’s strategy holds promise but might only slow -- not stop -- the company’s downward slide, said Martin Laetsch, senior director of search strategy at San Diego-based Internet marketing firm SEMDirector Inc.
“Yahoo is still in a catch-up, me-too kind of mode,” Laetsch said. “Until they get out of that, they are not going to really turn this around.”
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