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Yahoo Acquires Right Media

Not to be outdone by Google, Yahoo this morning announced its purchase of Right Media, the provider of an online advertising exchange containing more than 1,000 publishers. Yahoo already owned a 20 percent stake in the company; today it purchased the rest for $680 million in cash and stock.

Google, in announcing its intention to acquire DoubleClick, staked its claim to move into the high-stakes territory of graphical ad-serving, but Yahoo's new purchase is different. Whereas DoubleClick makes most of its money selling expensive ads to publishers of premium content, Right Media provides an open ad exchange for advertisers to bid on publishers' inventory--mostly nonpremium display ads.

The idea is to create advertising that like DoubleClick to Google would operate separately from its parent. Yahoo chief Terry Semel thinks its nonpremium inventory will now sell at higher prices, thanks to the auction-based market. He noted that the acquisition also greatly expands Yahoo's ad network. The acquisition of Right Media could help offset declining revenue growth of Yahoo's premium inventory, which was up just 7 percent in the first quarter. It should be noted that the ad exchange market is increasing in competition, as DoubleClick, shortly before its acquisition by Google, announced its entry into the market; eBay, of course, is powering an exchange in conjunction with the four As.

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