On April 30, 2007 the war between search engines got a little bit more serious when Yahoo! announced its purchase of Right Media for a approximately $680 million dollars. This now puts Yahoo! in a position to compete with Google who recently acquired Doubleclick, Inc. for a reported $3.1 billion dollars. While it appears that Yahoo! is only copying Google, this was not an out of the blue decision for the search engine giant since it already owned 20% of Right Media as of October 2006.
Right Media was founded in 2003 as a direct marketing solution for online marketers looking to draw in a higher volume of traffic. Once upon a time, marketers and search engine giants such as Yahoo! and Google, depended on text based messages in order to drive traffic. Then Right Media began to capitalize on the industry's movement toward more ad-based methods of driving traffic. One of the most appealing aspects of Right Media to companies was the opportunity to purchase and sell online ad materials in the free market or in other words in an auction fashion much like one would purchase a tablecloth on Ebay. This enabled companies to not only build up their ad inventory at a price they desired, but it also allowed them the chance to pick and choose which companies were worth forming a working relationship with. By recognizing not only the industry's movement toward more ad-based marketing but also the need to build an ad inventory while staying in budget, Right Media helped the industry to see billions of dollars begin to flow in a totally new direction within the online marketing industry.
Yahoo's intended purchase of Right Media still needs to be approved by the SEC before it actually becomes official but expects the sale to be completed by the second or third quarter of 2007. Regardless of when the sale will be completed, some are left wondering if Yahoo's purchase makes sense. Six months ago, Right Media was only valued at $200 million dollars, which means that at a $680 million dollar purchase price Yahoo! is paying nearly three times of what Right Media is actually valued at. Furthermore, Right Media is not considered by financial experts to be a profitable company. While it may look like a poor financial decision on the part of Yahoo!, the intention by Yahoo is to have Right Media complement the present Yahoo online marketing initiatives. The main initiative is to improve the online marketing industry's advertising methods and make these methods more open and accessible to any company that wishes to purchase interactive marketing advertising. Furthermore, as any company would desire, Yahoo hopes that the purchase of Right Media will aid them in becoming the number one company within the online marketing and publishing industry.
The purchase will allow publishers the opportunity to actually understand the true value of an advertising inventory, as well as, bundle their own advertising inventory with Yahoo and Right Media's inventory. In addition to helping publishers, advertisers will see a larger audience for their products and should even have a greater amount of control over the purchasing of ads.
Since both Google and Yahoo have bought new companies in an effort to become the number one online advertising company, rumor has it that Microsoft is also shopping around. It is suspected that Microsoft actually tried to purchase Doubleclick just before Google purchased it. What this means for the numerous online advertisers out there, is that they need to keep a check on this war between the search engines, as it is proving to be a war that will result in a major transformation of how online marketing and search engine use is performed.
