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Yahoo! has followed in the footsteps of Google with the purchase of an online ad exchange, taking control of US-based Right Media in a whopping $680m (£340m) deal.

Yahoo! made a strategic investment of 20% in Right Media in October last year, and today’s announcement will see it buying the rest of the firm.

Terry Semel, chairman and CEO of Yahoo!, said the move would…

"further Yahoo!'s goal to create the industry's most open, accessible and vibrant advertising marketplace, which will help democratise the buying and selling of digitally enabled advertising."

Launched in April 2005, Right Media is just one of a number of emerging exchanges for internet ads, which act as stock markets for publishers, networks and advertisers to trade inventory.

It claims to have more than 20,000 buyers and sellers using the platform a day, and according to Yahoo!, will "transform how online advertisers connect to and engage with their customers - both on and off the Yahoo! network".

As such, it will be seen as a competitive threat by online sales houses – unlike AdECN, a rival platform that launched recently in the UK and US and only allows ad networks to trade.

It also seems likely that questions will be raised about the willingness of big publishers to sell ads on Right Media if Yahoo! is benefiting from the transactions, and whether that will impact on the liquidity of the exchange.

Google seems likely to face similar issues now it has inherited plans for an online ad exchange through its purchase of Doubleclick.

Nevertheless, Susan Decker, CFO of Yahoo!, said the platform would be "open" and "neutral", and offer more choice for advertisers and publishers:

"Yahoo! is the largest online publisher and one of the leading ad networks on the web, and we believe it is in our strong financial interest to make sure there is a widely adopted, neutral, frictionless exchange that enables publishers and advertisers to benefit from a basket of the best solutions rather than having to accept a single solution from one of the larger players."

An understandably chuffed Michael Walrath, Right Media's founder and CEO, called the move "one giant leap for advertising":

"Yahoo! will add considerably more supply and demand to the Right Media Exchange, increasing liquidity in the market and broadening the opportunity for advertisers, publishers, networks and technology providers alike to grow their businesses. The deal will also leave us with access to more resources to continue to accelerate the pace of innovation on the exchange."

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Published 30 April, 2007 by Richard Maven

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