Yahoo Acquires interclick For $270 Million, Enhances Data Targeting

Yahoo announced Tuesday it has agreed to acquire behavioral targeting network interclick for about $270 million in cash. The Web portal said the deal, in which it valued interclick at $9 a share, would enhance its data-targeting and optimization capabilities. It will also provide new premium inventory supply drawn from disparate sources.

"This investment underscores our focus on enhancing the performance of both our guaranteed and nonguaranteed display business across Yahoo and our partner sites and, combined with Yahoo's reach and advertising leadership, will deliver a powerful solution for marketers," said Ross Levinsohn, EVP, Americas region.

Yahoo’s display ad growth has slowed significantly in the the last two quarters, in part because of challenges monetizing remnant inventory.

Tim Morse, Yahoo’s interim CEO, conceded in the company’s third-quarter conference call that it needed to improve yield on its nonguaranteed ad inventory. The addition of interclick’s optimization technology and ad sales force could help Yahoo address that issue.

Through its Open Segment Manager data-valuation platform, interclick aims to help marketers boost the effectiveness of their online display and video campaigns. The company ran into legal problems earlier this year when it was sued by a New York resident for allegedly violating her privacy by using “history-sniffing” technology. A federal judge in August threw out a potential class action against four major advertisers accused of working with interclick to use the history-tracking techniques, but the lawsuit against interlick was not entirely dismissed.

Interclick founder and CEO Michael Katz stated that the combination of Yahoo's premium data and inventory with the company’s platforms will create “tremendous value” for clients. The deal is expected to close by early 2012.

The transaction comes as Yahoo continues to search for a new CEO and pursues a strategic review, which could lead to the sale of part or all of the company. Given the turmoil surrounding Yahoo, analyst Ben Schachter of Macquarie Research said the timing of the interclick acquisition was surprising. But in a research note Tuesday, he concluded that the deal wouldn't have a direct bearing on a larger Yahoo deal, given its relatively small size.