A Wise Analysis Of Our Yahoo Deal

October 24th, 2006

There’s been a lot of press coverage of the investment Yahoo made into Right Media last week.

One thing that stood out to me is that the most interesting analysis came from bloggers instead of media publications. One recent blog post stood out to me, and that was an analysis called Yahoo’s “Right” Decision by Bill Wise, the CEO of Did-It.com.

It’s worth a full read, but some highlight quotes for those who are lazy or in a hurry:

Yahoo has the second-largest search engine; that engine is funded almost entirely by auction-based advertising. Yahoo is also the Internet’s largest portal, and therefore one of the world’s largest publisher networks. But until now, the two sides of the business lived very different lives: the successful search side monetizes through auction-based advertising, while the publisher side has monetized through far more traditional models for network buys. With its purchase of Right Media, Yahoo can now bring its publisher monetization in line with its search business for all of Yahoo’s remnant space—and that’s key to effective yield management to complement online brand buys.

First I should note that Yahoo didn’t entirely purchase Right Media as mentioned in that quote, it was a 20% investment. Regardless, the PPC search world has shown that auctioning can be a very efficient and profitable way to deal with advertising, and we bring those traits to the display advertising world with our exchange. I think Yahoo understands this and we’re all very anxious to explore the ways we can tie Yahoo’s various advertising business lines with our exchange.

But the value of the Right Media investment is more than just a way to fix the Yahoo portal’s monetization model. It’s an opportunity for Yahoo to capitalize on its strengths and come into its own in the online world, and out from beneath Google’s long shadow. And it manages to do all this while delivering a wonderful strategic counter to GoogTube, which will undeniably expand Google’s reach well beyond search, and far into content.

Well, I think Yahoo has already come into their own long ago, but I hope Right Media continues to grow and drive large returns for Yahoo which can help them continue to compete in an ever-changing web world. We’re definitely a unique model at this point, and there are many possibilities out there for how the exchange model can help the industry as a whole.

Yahoo clearly knows something about the world of online visuals, as well, whether you’re talking about the display ads and image and video content it offers on its portal; Yahoo video search, which predates Google Video by roughly two years; or its farsighted purchase of photosharing site Flickr, which Yahoo bought when YouTube was only a few weeks old. Yahoo clearly understands the worlds of content and online graphical display, and the investment in Right Media and the placement of the auction media model within the Yahoo portal means that Yahoo can now unlock a huge potential that it’s been sitting on for a long time, and truly begin to monetize its greatest strengths.

That’s just an awesome summary. It makes me even more excited to get to work when reading that.

And that’s why I predict a new online world order, coming soon. Yahoo, funded by the monetization through auction-based display ads and its large display network, will be able to solidify its lead in both content and graphical ads. It will become for content and graphical display what Google is for search and text links. How crucial will this change be in online history?

I like that prediction. How crucial will that change be?

Related Posts:

• Digg vs. Slashdot
• Welcome to Bill Wise
• It’s Been a Wild Few Days, and Looks to Be a Wild Year
• Unlimited Storage for Yahoo! Mail, Crazy?
• Best Doubleclick Acquisition Post

Entry Filed under: Ad Networks, Advertising, Random, Right Media, Yahoo