Yahoo Sells Ads for Bebo

Yahoo Inc. will sell display advertising for Bebo Inc., the first such deal Yahoo has secured with a social networking site, the companies said on Wednesday.

The agreement marks a significant milestone for Yahoo, whose turbulent management troubles and sagging revenues have left it chasing Google Inc. and Microsoft Corp. for a slice of growing online advertising revenues.

Under the deal, Yahoo will sell the majority of Bebo's display ads for the U.K. and Ireland, reaching around 11.6 million users per month, the companies said, siting traffic statistics from comScore Networks Inc. About 75 percent of the U.K.'s Internet users visit Bebo, particularly 13 to 24-year-olds.

Yahoo already supplied search for Bebo. No information was released on how much either company will make from the deal. The new features should be visible later this year.

Yahoo and Bebo also plan to develop a toolbar that will enable Bebo users to monitor activity on the site even when they are not actively viewing it. Bebo will also weave into its site Yahoo's Answers feature, a bulletin-board type service where people answer each others' questions and rank those answers based on quality.

Yahoo will bring Bebo advanced ad targeting capabilities, which will enable ads to be served based on what other Web sites a person has been viewing, said Toby Coppel, managing director of Yahoo Europe.

The technology, he said, uses third-party cookies, which are bits of data sent to a browser by a Web site and store certain information about users. That data is then used by ad networks to serve up what ad networks believe are relevant ads.

"We been investing significantly in our behavioral targeting capability" in Europe over the last nine months, Coppel said.

Last week, Yahoo announced it would pay US$300 million for BlueLithium Inc., a company that sells banner advertising to around 1,000 Web sites. Yahoo said in April it would buy the rest of Right Media Inc. for $680 million, which runs a marketplace for advertising to purchase space on Web sites.

Bebo places only one ad on a user's profile, which is intentional to preserve a good user experience, but that ad also has to be the highest revenue generator, said Joanna Shields, Bebo's international president.

"The type of ad and the fact that the ad is targeted and relevant to users is absolutely essential," Shields said.

Bebo's direct sales advertising team, whose duties will be turned over to Yahoo, will now develop integrated marketing plans with brands and partners, Shields said.

The deal could be a needed boost for Yahoo. The company has seen the departure of more than a dozen senior managers since it announced a reorganization last December. Co-founder Jerry Yang, who took over as CEO from Terry Semel in June, vowed to investors in July to put the company back on track.