Yahoo! Buys Bigger Foothold in LatAm Ad Market

Web portal Yahoo!, aiming to boost advertising revenue amid one of the industry’s worst downturns in recent history, is snapping up troubled StarMedia’s Brazil-based search engine, Cade?, with an eye to increasing its foothold in Latin America.

Financial terms of the sale were not disclosed. By purchasing the portal, Yahoo! gains one of the major online media players in the region. Cade?, which means “Where is?” in Portuguese, reaches about 2.1 million Web users monthly, according to Nielsen//NetRatings and Ibope figures.

In conjunction with Yahoo!’s own Brazilian subsidiary, the property will reach an expected 52 percent of the Brazilian Internet market, which is the largest in Latin America. About 45 percent of the region’s 22 million users reside in Brazil, according to market researcher IDG.

As a result, Yahoo! would essentially command the third-largest Web property in Brazil by traffic. However, the company said that each site would appear relatively independent, retaining their original URLs but combining and sharing their directories of regional Web sites. Cade? also will include links to Yahoo!’s jobs, shopping, e-mail and GeoCities home page hosting areas.

Yahoo! said it plans to standardize ad selling practices across both sites, under the administration of its Fusion Marketing group.

The move, Yahoo! said, would provide better targeting and larger audiences for advertisers looking to reach the Brazilian Internet population.

“This acquisition demonstrates our commitment to constantly improve on the user experience and our determination to be a long-term player in the Brazilian market,” said Roberto Alonso, who is vice president and managing director for Yahoo! Latin America. “As we continue to build the Internet’s leading global consumer and business services company, Yahoo! remains focused on delivering relevant, comprehensive content, programs and services to consumers, advertisers and customers around the world.”

Yahoo!’s efforts to reach advertisers in Latin America come as a handful of major offline brands are looking to the area.

General Motors, for instance, last year struck a deal with Miami-based portal and ISP Universo Online to create sponsored areas and e-mail promotions targeting the Brazilian, Argentinean and Columbian populations. It was the first effort by GM to market internationally via Web media buys, and the automotive giant said it also planned to launch similar initiatives elsewhere in Latin America.

In May, StarMedia landed a heap of new financing from BellSouth and magazine publisher Primedia — both of which received company stock and sizable advertising and marketing opportunities on the company’s Latin American sites.

Still, such efforts by major advertisers evidently couldn’t help New York-based StarMedia, which has been hit hard by the downturn in the Internet economy, and lately, accounting woes.

Indeed, it would seem that the sale of Cade? to Yahoo! marks a significant about-face for the media player, which had aimed to focus on both the U.S. Hispanic/Latino population, and Portuguese- and Spanish- speakers in Latin America.

But executive say the move is in line with StarMedia’s “evolution,” according to the language used in the company’s Securities and Exchange Commission filings on Tuesday — an evolution that doesn’t include a search and Web directory.

“The sale of Cade? reflects StarMedia’s focus on providing value to clients, primarily through a combination of direct response marketing programs, sponsorships, portal development services, and wireless technology and applications,” said StarMedia president and chief executive Enrique Narciso.

According to the regulatory filing, Cade? “is not in line with this new strategy.”

In addition to the troubled advertising market, StarMedia’s “evolution” takes place as the firm prepares to restate earnings for all of 2000 and the first half of 2001. That’s due to suspicions that two Mexican subsidiaries — Web directory AdNet and StarMedia Mexico — improperly recognized approximately $10 million in revenues. At the same time, the company also announced the resignation of its chief financial officer, and the firing of its general counsel.

Still, despite the current problems, Narciso remains optimistic with StarMedia’s direction.

“We look forward to the opportunities ahead of us, and are confident in StarMedia’s position in the marketplace offering integrated media and business solutions across multiple platforms that leverage the company’s technology, content and audience.”

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