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April 30, 2007

Yahoo! buys Right Media, a smart move to defend its online ad leadership

by Charlene Li

I just posted on the acquisition of Right Media by Yahoo! on Forrester's Marketing Blog, primarily to keep the discussion/comments there for that audience. But I know that some of you follow the advertising/portal space closely so thought you'd like to know about the detailed post.

From a social technologies perspective, there are two things to point out.

First, Right Media could be an interesting alternative to AdSense, specifically for graphical display ads. The distinguishing characteristic is that CPM rates are visible to both the publisher and advertiser. This gives site and blog owners the ability to optimize each and every impression.

Second, Yahoo! has a strong audience of social computing-adept users via acquisitions like Flickr and del.icio.us, but doesn't aggressively monetize them on those sites. One of the opportunities Right Media  could offer is the ability to serve ads to users when they are off the Yahoo! site.

For example, someone who views content about hybrid cars on Yahoo! can be served ads from Toyota for the Prius. That user may then leave Yahoo! and go over to Treehugger.com to read more about environmental news and products. If treehugger.com is a member of the Right Media exchange (this is a hypothetical example), it could potentially serve ads to that hybrid-interested buyer from Yahoo! advertisers (like Toyota) on treehugger.com. The ad exchange would serve as the trusted intermediary to identify the users and serve the ads -- without actually exchange data about that user. As with other behavioral ad networks like Tacoda, such a system would need to have multiple privacy and content safeguards in place.

For blogs that draw a unique audience, this could be highly lucrative. Treehugger.com already draws an audience that is pre-disposed to buying a Prius, but doesn't know who is a potential car buyer unless that user lands on Treehugger's car/transportation section. By passing along that interest, Yahoo! makes it possible for Treehugger to realize a higher CPM for that run-of-site impression, while Yahoo! gets an additional ad impression to sell it Toyota.

Tags: Yahoo, Right Media, charleneli, Forrester Research, Groundswell

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