Yahoo to Buy Online Analytics Company IndexTools

Yahoo looks to dig deeper into online click tracking as the market heats up. 

Yahoo announced on April 9 that it will acquire IndexTools, an online advertising analytics provider, a purchase that should improve Yahoo's position to take on Google and Microsoft in the battle for online advertising dollars.

Microsoft meanwhile continues its threat to acquire Yahoo, forcefully if necessary, in an attempt to compete with Google.

IndexTools, otherwise known as Tensa Kft, competes with Google Analytics and Microsoft adCenter Analytics, and several smaller online analytics companies. It provides an analytics platform to monitor Web traffic and consumer clicks.

The company uses a browser-based system to identify and track visitors; it's able to tell where consumers go on a Web site and what they do while they are there. That's exactly the kind of information Yahoo is looking to bolster as the Web giants become modern day publishing networks battling for advertising budgets.

"What is the Holy Grail for online marketers?" wrote Bassel Ojjeh, senior vice president and Head of Yahoo Strategic Data Solutions, in his April 9 blog. "Well, it starts with knowing in real time whether your campaign is working or not. And it ends with turning that insight into tweaks that improve performance. After all, nothing is worse for advertisers-and consumers-than marketing that bombs."

Tracking online advertising has become a common practice since DoubleClick-which was acquired by Google last year-rose to prominence in the late 1990s for its ability to utilize browser cookies to track users as they travel from Web site to Web site, recoding which advertisements they clicked on in the process.

But another use for consumer tracking is evolving. Called behavioral advertising, this analytics software captures data based on online patterns of use that allows online advertisers to better target ads to individual consumers. And legislators and policy makers have taken notice, with a battle brewing over whether behavioral advertising practices should be legislated.

IndexTools track consumer clicks when a visitor loads a Web page that contains the IndexTools tracking script. The tracking script gathers data about the Web page and visitor and forwards the information to the IndexTools Data Center, which processes the data and archives it into a central database. Advertisers log into IndexTools to view their marketing performance reports in real time, according to the company's Web site.

Yahoo said in a statement that the 150,000 small and midsize businesses that use Yahoo for online marketing will be the first to utilize the tools from IndexTools. Ojjeh said in his blog that eventually Yahoo will extend the tools to third-party developers "who can use them to track how their applications are performing with visitors."

IndexTools, with offices in Frankfurt, New York and Budapest, has grown more than 100 percent each year for the past four years, according to the company's Web site.

The terms of the deal were undisclosed. Yahoo expects its acquisition of IndexTools to close in the first half of 2008. Meanwhile, Yahoo is fending off a $44 billion bid from Microsoft as it seeks either more cash for the company, or independence.