Yahoo (NASDAQ:YHOO) picked up BlueLithium, a fast growing behavioral marketing firm, for $300 million and rounded out what it hopes will be a stronger ad arsenal.
In a statement, Yahoo noted that:
The addition of BlueLithium is the logical next step in creating the largest and most effective online ad network globally, which includes inventory on Yahoo!’s owned and operated properties, the Yahoo! Publisher Network, and the Right Media Exchange. According to comScore Media Metrix, BlueLithium is the fifth largest ad network in the US and second largest in the UK with 145 million unique visitors each month.
In the big picture, BlueLithium gets Yahoo closer to its goal of selling remnant inventory and targeting user behavior better. Yahoo will also get access to BlueLithium’s data analytics. The Holy Grail: Monetize social networking areas where inventory is infinite, but direct responses are spotty. Yahoo will combine BlueLithium with its own ad network and the recently acquired Right Media Exchange.
In a blog post, Todd Teresi, senior vice president of the Yahoo Publisher Network, said:
With more than 100 employees, including computer scientists and researchers, BlueLithium is known for providing powerful data analytics to help customers get the most out of their campaigns as well as impressive behavioral targeting capabilities. They provide the dashboards and insights our performance customers have been asking for — capabilities that have been a bit of an Achilles heel for us.
By acquiring BlueLithium, we’ll be accelerating our advertiser, product, and engineering roadmaps and will be in position to better compete in the burgeoning performance marketing arena.
This is the logical next step as we build what we believe will be one of the world’s leading online display ad networks, which includes inventory on Yahoo!’s owned and operated properties, our affiliate network (our partnerships with eBay (NASDAQ:EBAY), Comcast (NASDAQ:CMCSA), and our consortium of nearly 400 newspapers), the Yahoo! Publisher Network, and the Right Media Exchange.
The analyst reaction was generally positive. Here’s a look:
Christa Quarles, analyst Thomas Weisel:
“We believe BlueLithium brings three things to Yahoo!: (1) Scale in its ad network business; (2) strong behavioral targeting technology; and (3) a strong international presence. BlueLithium is expected to become a part of the Right Media exchange upon completion of the acquisition (though Yahoo! has already been working with BlueLithium on its own remnant inventory)…We believe BlueLithium may not be the last ad network that Yahoo! consolidates in its quest for scale. In addition, while BlueLithium relies
heavily on cookie data, the combination of search data and cookies could hasten the improvements in monetization on Yahoo! remnant inventory.”
Jeetil Patel, analyst at Deutsche Bank:
“We think Yahoo! ends up with modest sorely needed targeting capabilities via BlueLithium in order to improve yields across its own inventory. With Yahoo!, the question remains as to whether the BL technology is robust enough to create a behavioral targeting solution to positively impact Yahoo! The other component Yahoo! must address will be the creation of ad inventory (i.e. supply) in areas outside of Y! Mail, where premium ad inventory exists.”
Imran Khan, analyst at J.P. Morgan:
“We believe Blue Lithium will further improve Yahoo’s monetization of display advertising. We believe advertisers will pay higher CPMs for responsive targeted ads. We think that, in addition to Right Media, Blue Lithium’s adPath technology will help further monetize remnant inventory.”