Sunnyvale, California — Seeking to beef up its sales of premium online ads, internet pioneer Yahoo on Wednesday announced an agreement to acquire 5to1, an online advertising platform that lets top brand advertisers purchase unsold premium inventory on the sites of 20 major publishers, for $28 million.
In its announcement, the California-based Internet pioneer did not reveal financial terms of the acquisition, but unconfirmed reports put the price in the $25 million-to-$30 million range.
Yahoo claims that the acquisition will empower it to maximize the premium inventory it can offer advertisers.
“5to1’s innovative platform and premium private marketplace will further enable Yahoo! to extend our advertising leadership,” said Wayne Powers, senior vice president of advertising sales for Yahoo! in North America.
“5to1 offers additional access to publishers and unlocks the value of unsold inventory for premium brand advertisers,” he added.
Yahoo anticipates on leveraging 5to1’s technology and roster of publisher partners and advertiser clients to boost its sales of premium ad inventory.
Moreover, 5to1 situated in Los Angeles, describes itself as an “online advertising alliance” formed with more than 20 top publishers (although it has not named them) who offer brand advertisers premium ad space online “at mass scale,” according to its website.
Yahoo has customarily 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. Besides, customers for these ads are typically large organizations with strong brands that run online campaigns to market their products and services, like movies, soft drinks and cars, to consumers.
On the contrary, global search engine gian Google 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 striving for years to make a strong-hold into premium display advertising and has invested billions in this effort, including its acquisitions of DoubleClick and YouTube, and has recently began to witness progress.
Anyway, it is 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.
Additionally, the startup established in 2009 as a way to reduce brand marketers’ concerns about buying unsold inventory by former executives from News Corp.’s Fox Interactive.
Furthermore, 5to1 has ties to Ross Levinsohn, the former News Corp. executive who joined Yahoo as Yahoo Americas EVP in October. The company was started by several other Fox Interactive Media executives and had also raised funding from Fuse Capital, the investment firm Levinsohn founded when he left News Corp.
Apart from Levinsohn, the team includes CEO James Heckman, who sold another company he founded–Rivals.com–to Yahoo for $100 million four years ago, and Michael Barrett — also former Fox Interactive Media execs.
Yahoo’s announcement is short on details on how it will integrate 5to1’s marketplace. The deal is expected to close by the second quarter of the year, the 5to1 team will join Yahoo as part of its Ad Marketplaces group.