Yahoo spent $680 million in cash and stock to acquire Right Media, but the synergy from that acquisition won’t be seen until 2008, according to Yahoo VP Sue Decker.
CEO Terry Semel explained that long-term view as part of a strategy dedicated to fostering openness and transparency in an advertising marketplace.
“We took…that original 20 percent stake [in Right Media] in order to evaluate..the viability of the marketplace growing,” Semel said on a Yahoo conference call today concerning the acquisition.
In a swipe at Google, Semel said that if Right Media’s marketplace continued to scale, Yahoo stood to gain value in the marketplace, “not just in a proprietary black box. What we said to ourselves is that there’s an enormous opportunity coming, and we need to restructure ourselves” to take advantage of it. “This could open up a whole new system of openess.”
Decker said Yahoo expected Right Media to add significantly to Yahoo’s ad sales due to a lift in O&O nonpremium inventory pricing and opening up those O&Os to other parties. “We sell, you sell,” Decker said.
Before the acquisition, Right Media was expected to earn $70 million in revenues in 2007 on 6 billion transactions per day. Walrath said he expects average ad prices to rise due to the application of better targeting capabilities and a wider breadth in buyers.
Right Media does not disclose the range of CPM values for those ads. Right Media CEO Michael Walrath, touting his company’s commitment to openness, said that the value of each impression is discovered by the market.