As Doug noted yesterday evening, Yahoo!, Inc. (NASDAQ: YHOO) has agreed to purchase behavioral advertising company BlueLithium for $300 million. With Yahoo! being seen by some as an attractive takeover target amid still-unimpressive performance as of late, was this too much for the struggling company to pay for an ad company? You make that call. My call is that Yahoo! is desperately seeking something to convert all those eyeballs across its web network into dollars. A lot of dollars.
BlueLithium is a company that deals with consumer psychology and extremely targeted marketing, and that's just what Yahoo! needs to more fruitfully compete with the likes of Google, Inc. (NASDAQ: GOOG) and Microsoft Corp. (NASDAQ: MSFT), now that the latter has closed the $5 billion+ deal with ad firm aQuantive. Are the 'big three' trying to consolidate the internet advertising and targeting market? You could say that.
If Yahoo! can leverage BlueLithium's technology that tracks web surfer behavior across multiple websites in order to deliver the most relevant ads possible, then it may have something to celebrate. The whole point of advertising in the internet age is to make the marketing as customizable to each individual surfer as possible in order to convert them, at some point, into a paying customer.
Google started this trend years ago based on keyword searches, but ads now need to expand beyond that. Does that completely irrelevant mortgage ad alongside your Yahoo! Mail work? Is it targeted? My guess -- it's not at all targeted and it's more annoying than useful for customers who may even be in the market for a mortgage. Yahoo! needs to make this acquisition work, and work well. If not, it'll be another huge misstep for the company as it tries to regain relevancy in a changing ad market.
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