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Yahoo Buys Online Ad Network

Yahoo's recently promoted Hilary Schneider just got a new tool for her recently created Global Partner Solutions (GPS) division.

Yahoo has announced it will buy online ad network BlueLithium for approximately $300 million in cash. The deal is supposed to help Yahoo complement its already successful brand advertising business with a better expertise in direct marketing.

"This acquisition will extend our ability to deliver powerful data analytics, advanced targeting and innovative media buying strategies to our customers, who are increasingly looking for these insights," Yahoo CEO Jerry Yang said in a statement.

Todd Teresi, senior vice president of Yahoo Publisher Network, told internetnews.com that BlueLithium brings Yahoo product capabilities, including audience targeting, based on consumer interests; ad remarketing based on how users interact with previous ads; Web pages, custom segmentation, reach-extending spot buying; and the ability to increase an ad's frequency against a marketer's target audience.

Teresi explained ad remarketing as the ability for Yahoo to note how users have interacted with its site in order to serve them increasingly relevant advertising. For example, Teresi said that users who used the search term "cell phone" might later see more brand advertising from Sprint. If those same users then interact with that brand advertising, they might see a more transactional ad later, one that might take them closer to the actual purchase of a cell phone.

Spot buying will allow Yahoo to meet advertising demand beyond its own inventory by purchasing advertising space from third parties and then reselling it to Yahoo marketers.

Yahoo said BlueLithium will be an active participant in the Right Media Exchange, which Yahoo acquired in April for approximately $680 million in cash and stock.

As for improving Yahoo's audience targeting, Teresi said the best way to look at is that Yahoo will extend its current capabilities, such as observing how users interact with advertising, content, and each other, and expand them off the Yahoo network to publish partners who use BlueLithium.

Today's buy comes eighteen months after Yahoo announced its goal to become the world's leading advertising network, Teresi said. Other milestones he mentioned were Yahoo's advertising agreements with eBay and hundreds of local newspapers. There was also Yahoo's $680 million Right Media Exchange acquisition in April.

Just yesterday, eMarketer announced that for the first time, online advertising revenues will surpass radio advertising. Numbers like that will assure Yahoo is not alone in its goal of Internet advertising world dominance.

Google is the leader for now, a position bolstered after it acquired ad server DoubleClick for $3.1 billion last spring.

Microsoft , which is also in hot pursuit and made its big acquisitive splash when it bought aQuantive for $6 billion, puts Google's hold on Internet advertising market share at 80 percent.

Yahoo said that BlueLithium will become a wholly-owned subsidiary. The transaction, subject to customary closing conditions, is expected to close in the fourth quarter. BlueLithium CEO Gurbaksh Chahal will remain with the acquired company only through integration.