Yahoo to Buy Startup to Boost Premium Ad Sales
Seeking to beef up its sales of premium online ads, Yahoo has agreed to acquire 5to1, a startup founded in 2009 by former executives from News Corp.'s Fox Interactive.
5to1, based in Los Angeles, describes itself as an "online advertising alliance" made up of about 20 major publishers who offer brand advertisers premium ad space online "at mass scale," according to its website.
Yahoo foresees leveraging 5to1's technology and roster of publisher partners and advertiser clients to boost its sales of premium ad inventory.
The deal is expected to close in this year's second quarter. The 5to1 staff will join Yahoo's Ad Marketplaces group.
Yahoo has traditionally been a strong player in the market for premium online ads, which, compared with other online ad formats, are more expensive, graphically rich and prominently placed.
Customers for these ads are typically large companies with strong brands that run online campaigns to market their products and services, like movies, soft drinks and cars, to consumers.
Google, on the other hand, leads in search ads, which are usually cheaper, plain text ads linked to a destination website and whose display is triggered by the topic of search queries or of Web pages in participating publisher sites.
However, Google has been trying for years to make a strong push into premium display advertising and has invested billions in this effort, including its acquisitions of DoubleClick and YouTube, and has started to see progress in the past year.
Thus, it's not surprising to see Yahoo pursuing acquisitions to help it protect and boost its presence in this space, which is key to its financial stability and potential future growth.
5to1 founders include former Fox Interactive executives James Heckman, who is 5to1's CEO, and Ross Levinsohn, who left 5to1 to join Yahoo as executive vice president for the Americas region in October of last year.