Yahoo Acquires Ad Software Firm Interclick for $270 Million

By Beecher Tuttle November 01, 2011

Amid speculation that it may look to sell off all or part of its business – and without a permanent CEO in place – Yahoo has made an acquisition of its own. The Internet giant on Tuesday announced plans to spend $270 million in cash to purchase interclick, a New York-based technology company that builds software to help online advertisers market their products to a targeted audience.

The deal has raised a few eyebrows because Yahoo is offering interclick investors $9 a share, representing a 22 percent premium over the stock's closing price on Monday. That said, Yahoo clearly needed better ad targeting and analytical tools to compete with the likes of Google, which basically prints money through its online advertising initiatives.

The Wall Street Journal reported that the deal is part of a concerted effort by Yahoo to eliminate a "chronic problem," where digital ad sellers purchase discounted Yahoo ad space and then resell it to online advertisers at premium prices. Industry experts told the news source that Yahoo may be losing tens of millions of dollars a year due to flaws in the current system.

interclick will give Yahoo the tools necessary to eliminate some of the statistical challenges facing digital advertisers while helping them optimize their returns across a variety of premium supply sources, according to company officials.

"This investment underscores our focus on enhancing the performance of both our guaranteed and non-guaranteed display business across Yahoo and our partner sites and, combined with Yahoo!'s reach and advertising leadership, will deliver a powerful solution for marketers," Ross Levinsohn, Yahoo's EVP for the Americas region, noted in a statement.

The acquisition comes at a very interesting time for Yahoo, which has been making news for all the wrong reasons this year. Things got off to a rough start in May when company executives were forced to admit that they were unaware that Alibaba, a Chinese Internet giant that Yahoo maintains a 43 percent stake in, spun off one of its most profitable businesses nearly a year earlier.

The Alibaba incident caused Yahoo shares to decline rapidly, and led many investors to call for the head of now ex-CEO Carol Bartz, who was eventually shown the door in August.

Yahoo's board has yet to hire a new permanent CEO and has been undergoing a "strategic review" of the company for the last six weeks. Rumors then popped up on Monday that Yahoo may look to sell off its Asian assets, but retain its domestic businesses.

Needless to say, interclick employees are probably wondering what they go themselves into. Yahoo shares were down 9.6 percent in early morning trading on Tuesday.

Beecher Tuttle is a TechZone360 contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves

TechZone360 Contributor

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