SAN FRANCISCO -- Yahoo Inc. yesterday added another weapon in its high-stakes duel with its richer Internet rival Google Inc. by snapping up online advertising exchange Right Media Inc. for $680 million.
Although the cash-and-stock price is well below the $3.1 billion that Google recently agreed to pay for online ad distributor DoubleClick Inc., Right Media didn't come cheaply for Sunnyvale, Calif.-based Yahoo.
Last October, Right Media was valued at $200 million based on the $40 million that Yahoo then paid to acquire a 20 percent stake in the privately held company. Yahoo is now paying more than three times Right Media's valuation just six months ago to gain full ownership of an exchange designed to make it easier for Web publishers to show what they have to sell to online advertisers.
The notion of a more transparent market is becoming increasingly attractive to both publishers and advertisers, especially since it has become apparent billions of dollars in spending is bound to migrate from other media to the Internet during the next decade.
With the shift, major advertisers are expected to increasingly emphasize more visual ads instead of the short text-based messages that have driven the success of search-driven networks controlled by Google and Yahoo.
Both Right Media and DoubleClick specialize in these display, or so-called "graphical," ads.
New York-based Right Media isn't profitable, but is expected to generate about $70 million in revenue this year, doubling from 2006, Yahoo finance chief Susan Decker said yesterday. Right Media typically collects a 7 percent commission on advertising arranged through its exchange.