Yahoo in $680-million deal for Right Media
Yahoo Inc., in a bid to shore up its online display advertising business and take a swipe at Google Inc., has agreed to pay $680 million in cash and stock for the 80% of Right Media Inc. it doesn’t already own, the company said Monday.
Right Media operates an online marketplace where advertisers and website publishers buy and sell ads in much the same way goods are auctioned on EBay. Yahoo acquired a 20% stake in Right Media in October.
Two weeks ago, Google agreed to pay $3.1 billion in cash for DoubleClick Inc., a Web advertising company that places banner ads and tracks where people surf online -- and that in April announced it would start a marketplace similar to the one offered by Right Media.
Whereas Google’s revenue has been expanding quickly, Sunnyvale, Calif.-based Yahoo has struggled to maintain growth.
“We believe the biggest fundamental issue regarding Yahoo now is the significant deceleration in its display ad business,” Mark Mahaney, an analyst at Citigroup, wrote to investors.
Right Media has the potential to give Yahoo the boost it needs, said analyst Scott Devitt with Stifel, Nicolaus & Co.
“This acquisition gives Yahoo access to one of the fastest-growing components of the display advertising business,” he said.
Founded in 2003 and based in New York, Right Media is expected to break even this year on $70 million in revenue. It has gained traction by giving advertisers detailed reports on how their ad dollars are spent. Publishers also see how much they’re earning from each banner ad.
“They allow both advertisers and publishers to see a lot more data,” said Samir Patel, president of SearchForce Inc., an online ad agency in San Mateo, Calif. “And that helps both parties make better decisions.”
Right Media, with an audience of 20,000 buyers and sellers, has attracted users because its auction format is viewed as an efficient way to buy and sell ads.
“It’s a very cheap way to buy banner ads on small- to mid-sized websites,” said Tim Vanderhook, chief executive of Irvine-based online advertising agency Specific Media Inc.
Yahoo, whose shares fell 30 cents to $28.04 on Monday, expects to complete the deal in the next three months.
