Yahoo Acquires Blue Lithium

Giant Adds Fifth-Largest Ad Network to Attract Direct-Response Ads

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NEW YORK ( -- In its latest effort to appeal to performance marketers, Yahoo has dropped $300 million on Blue Lithium, which was the fifth-largest online-advertising network in ComScore's July rankings.
The Blue Lithium acquisition signals another step in the way Yahoo is reorganizing.
The Blue Lithium acquisition signals another step in the way Yahoo is reorganizing.

The network will help Yahoo aggregate an audience, whether it appears on Yahoo-owned and -operated sites or across the web. It also will help Yahoo bolster a weak spot: attracting direct-response marketers.

"This gives the sales team a powerful expertise and tool set they can take to performance marketers," said Todd Teresi, senior VP-Yahoo Publisher Network. He stressed that the deal is part of "our strategy of leading a transformation in how advertisers connect with publishers," which began when Yahoo bought Right Media Exchange (the 80% it didn't already own) earlier this year for $680 million.

Yahoo's reorganization
It also signals another step in the way Yahoo is reorganizing. It has long been considered the top sales organization for cost-per-thousand-based brand advertising online, but in recent months the portal has focused on growing its performance business. Brand marketers tend to be interested in metrics such as brand lift and engagement; performance marketers want conversions.

While Yahoo's advertising success has been fueled mainly by brand marketers, Google's has been performance-oriented. (Search began as mostly a performance-marketing channel, although that arguably is changing.) In an interesting role reversal, Google is working harder to court brand advertisers, while Yahoo is going after performance marketers. In June, Yahoo appointed the head of its search advertising, David Karnstedt, to head all U.S. ad sales.

Blue Lithium also will allow Yahoo to offer more frequency in existing verticals and placate potential sellout situations, Mr. Teresi said. Blue Lithium, which launched in 2004, will have access to Yahoo's owned-and-operated inventory and Yahoo Publisher Network inventory. It will also add its inventory to the Right Media Exchange.

'Well-lit environments'
Blue Lithium founder and CEO Gurbaksh Chahal said 50% of the company's inventory comes from ComScore's top 250 websites. "They're well-lit environments," he said, referring to the fact they tend to be safe, high-quality ad environments.

Yahoo already sells inventory for a network of partners, but this deal adds a different kind of arrangement. Yahoo's relationships with eBay, Comcast and the publishers in its newspaper consortium are more rep-firm-style, exclusive partnerships. Blue Lithium, meanwhile, runs a blind network in which it sells portions of web publishers' inventory without disclosing to advertisers exactly which sites in its network will run their ads. Its publisher relationships aren't necessarily exclusive, and a publisher in the Blue Lithium network may use many networks.

Company executives lauded Blue Lithium's targeted capabilities. Yahoo itself has a strong behavioral-targeting practice -- it is the fastest-growing segment at the company -- and likely will integrate some of that into Blue Lithium.

"Our ability to drive accelerated revenue growth will rise from our ability to give salespeople ... extensions of audiences and aggregated audiences," Mr. Teresi said. "That's the tool for No. 1 market share."
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