Written By Kate Zimmermann | April 30, 2007 | Share This |

Today Yahoo announced that it will acquire Right Media, a leading auction-based display ad exchange, for $680 Million. Right Media sells remnant inventory on a transparent auction platform, which Yahoo anticipates “will facilitate a frictionless model where buyers have equal opportunity to engage with the largest, most valuable audiences.” Yahoo has been a buyer and seller in the Right Media Exchange since October 2006, when it purchased a 20% stake in the company. Yahoo reports that it will increase its participation on both ends “to help increase liquidity in the exchange while empowering publishers and advertisers to generate more value for themselves within this vibrant marketplace.”

The acquisition is largely considered a response to Google’s recent purchase of display ad company Doubleclick. Though Doubleclick is significantly larger than Right Media, it recently launched an auction platform that directly competes with the Right Media Exchange. As Danny Sullivan at Search Engine Land points out, both Google and Yahoo have chosen to buy existing ad networks rather than attempt to build them from scratch.

Currently the Right Media and DoubleClick exchanges only deal with remnant inventory, which poses problems for growth. Both Google and Yahoo claim that their newly acquired exchanges will offer more than just leftover ad spots, but publishers and advertisers are adverse to giving up control of prime inventory. No less, the auction model (as exemplified by the growth of search!) is more economically efficient than traditional media buying.

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