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Yahoo Acquires Behavioral Ad Company BlueLithium
$300 Million

 11:11 pm on Sep 4, 2007 (gmt 0)

"Yahoo! Inc. today announced that it has entered into a definitive agreement to acquire BlueLithium, one of the largest and fastest growing online global ad networks that offers an array of direct response products and capabilities for advertisers and publishers. Under the terms of the agreement, Yahoo! will acquire BlueLithium for approximately $300 million in cash."



 11:41 pm on Sep 4, 2007 (gmt 0)

More info on it: [biz.yahoo.com...]


 11:48 pm on Sep 4, 2007 (gmt 0)

Along with the purchase they're acquiring BlueLithium's roster of Fortune 1000 Advertisers and their publishing network that targets 145 Million unique users.


 4:10 am on Sep 5, 2007 (gmt 0)

Anyone want to give their thoughts on the what & the why of this acquisition?


 4:50 am on Sep 5, 2007 (gmt 0)

Yahoo has been throwing a lot of resources into behavioral targeting and are ahead of Google in this area. Behavioral targeting makes sense to a portal like Yahoo because they are better able to implement that with a user who is surfing between their many services and websites.

From the Business 2.0 article about disruptors, September 2006 [money.cnn.com]

The Innovation: Serving highly targeted ads on the Web by monitoring everyone's clickstreams

The Disrupted: Google and plain-vanilla CPM ad networks like ValueClick and 24/7 Real Media

...you'd be tempted to dismiss Chahal entirely were it not for his claim that BlueLithium has been profitable since its third month of operation and is on track to hit $100 million in revenue by the end of next year.

...BlueLithium was founded in 2004 and already serves up 8 billion ad impressions a month to 100 million users of the Web's top sites.

Eight billion impressions to 100 million web users is a lot of inventory and eyeballs. Spread out over a year, that's an acquisition cost of twenty five cents per month per web user. Is that paying too much?


 6:00 am on Sep 5, 2007 (gmt 0)

This is something that could help Yahoo in many ways. Not only will it help them better target their existing ads, but will help bring the ads worldwide and give them another dimension to both YPN and its advertising program.

The amount of impressions, advertisers, publishers doesn't do justice to the price tag. What does, is the growth of the company and the name.


 7:20 am on Sep 5, 2007 (gmt 0)

It also sounds like Yahoo is interested in providing advertisers with the analytics side of the equation above and beyond simple conversion tracking (maybe kind of like Google Analytics on steroids?)


 9:16 am on Sep 5, 2007 (gmt 0)

I think it's a good move for Yahoo! I'm not sure I'm comfortable with the technology itself but from a business perspective Yahoo! made a great purchase. Monitoring peoples patterns so that you can serve up the type of ad they best respond to was bound to go mainstream eventually. It looks like "contextual" is old news and "behavioral" will soon be king.

I wonder how many actual existing websites 300 million could have bought or startup projects it could have funded. Actually owning the sites themselves seems like the next step... some day.


 4:20 pm on Sep 5, 2007 (gmt 0)

I'm not sure I'm comfortable with the technology itself...

It's a cookie that records the details of what you do, but not who you are.


 4:23 pm on Sep 5, 2007 (gmt 0)

Yahoo has already lost the battle for keyword-targeted direct-response ads, so it probably makes sense to wage war on another front (especially one where the terrain and inhabitants are friendly).


 5:06 pm on Sep 5, 2007 (gmt 0)

Yahoo is buying a seasoned management team in the affiliate marketing space.


 8:03 pm on Sep 5, 2007 (gmt 0)

It looks like "contextual" is old news and "behavioral" will soon be king.

This is an old argument, and I side with no way that behavioral targeting will replace contextual. Just because I bought a water filter last week it doesn't mean that while I'm surfing the net this week reading about tax law I will click on ads about water filters.

However, I can see the logic of how behavioral targeting might be more effective than contextual in cases like I continually week in and week out buy model airplane parts, so ads could show up for model airplane parts while I'm reading about Mormons and in theory I might have a higher likelyhood of clicking on the ads, but wouldn't I also have a high likelihood of clicking on ads about Mormons, after all I am on a site reading about Mormons right now not model airplanes? I think if anything behavioral targeting breeds attention deficit disorder by showing off topic ads which may have been on target at one point or another, but not now. In my mind behavioral targeting is trying to take my mind off of something I want to research or buy right now and put it on something that I would be highly tempted to get distracted into right now because it's something I've historically showed interest in.


 2:55 am on Sep 6, 2007 (gmt 0)

It looks like "contextual" is old news and "behavioral" will soon be king.

Sometimes they're apples and oranges, serving different purposes (branding/awareness vs. direct response). And sometimes one reinforces the other: for example, "contextual" can be a way of arriving at "behavioral," because the keyword targeting will tend to reach audiences with specific behaviors (such as people who cruise in the Mediterranean, hams who buy amateur-radio equipment, or ladies of a certain age who collect Hummel figurines).


 8:34 am on Sep 6, 2007 (gmt 0)

It's a cookie that records the details of what you do, but not who you are.

To be able to show ads on my computer that are based on things I've done in the past there needs to be a way for the "cookie" to recognize my computer and say hey, this is "such and such" computer, serve up those football ads again.

They will keep track of my computer and what I've done with it to show me ads they think will get results from me. Theres just too much room for abuse for my liking and besides, I don't think I want something actively trying new things to persuade me do something I wouldn't otherwise want to do ya know?


 8:36 am on Sep 6, 2007 (gmt 0)

In simpler terms, this is good for business and good for yahoo! but if its more successful it's bad for regular folks wallets IMO.


 8:40 am on Sep 6, 2007 (gmt 0)

Theres just too much room for abuse for my liking and besides, I don't think I want something actively trying new things to persuade me do something I wouldn't otherwise want to do ya know?

Yes the same here. I want to buy a thing when I need it, not because it is promoted. I need to compare, decide and wait for the right time.

I don't wish to see any kind of personalized search results too. I like to personalize the results myself by picking the ones I want, not a certain system trying to get what I have been upto and try to tell me what I should buy and shouldn't.

We need a little freedom here, I guess.


 11:20 am on Sep 6, 2007 (gmt 0)

I suppose behavioral targeting might me a more effective method of advertising to less Internet savvy individuals, due to their ability to quickly lose track of what they were doing and go back to something they were interested in a week ago.

In my opinion unless behavioral targeting firms abandon the cookie method and adopt an IP based tracking method they are going to find their lifespan short lived. When the average Joe starts realizing that he's on a site about cars that never mentions the term wrist watches but he's fully aware that recently he was researching/buying a wrist watch, he's going to feel like big brother or someone else must be spying on him, and for the ones that do a little digging and find it's those evil cookie thingies that they've been hearing about for years betraying them it's curtains for cookies forever. (I love the firefox deny all cookies less exceptions feature)

I would really love to see a study that compares hard numbers to determine whether contextual or behavioral targeting makes advertisers more money and whether behavioral targeting scares off consumers due to the potential for it to be perceived that they are being spied on. I'm sure some one out there has compared these two fruits with actual stats (in reference to EFV's comments about comparing apples to oranges :)

Don't misunderstand me, I'm not batting against behavioral, the moment Yahoo opens a behavioral targeting affiliate program or integrates it into YPN, I'll at least test it out so I can conduct my own study.

Wouldn't behavioral targeting imply that you had a history of behavior on a user already? So would Yahoo default the ads to contextual for all users that they don't have previous stats on?


 4:31 pm on Sep 6, 2007 (gmt 0)


Do a search on Google for "behavioral targeting study" and the first result (for me anyways) is a ClickZ report on an Advertising.com study of behavioral targeting and in which several advertisers saw 90-3000% improvements in CTR and/or conversion rates for behavioral targeting campaigns.

There are lots of other studies out there as well.



 4:34 pm on Sep 6, 2007 (gmt 0)

The ads would most likely be generic at first while the system "learns your patterns". I'm not sure if they'd also use personal information like your birthday to throw in birthday related ads. The article mentions showing baby related ads if you've recently had a child. I imagine that they would know because you'd visit more baby related sites.

This has a ton of potential to do extremely well, I hope they don't push it too hard however, I don't need to start receiving junk snail mail or cold phone calls about "baby item offers" simply because my computer figured out I had a baby. My personal information is already online in many places like whois etc.


 4:40 pm on Sep 6, 2007 (gmt 0)

I just closed webmasterworld and visited a news site, the first article is ironicly about the state of military data gathering super computer centers. They claim to "only" be able to track 92% of net traffic and 90% of cell phone calls. The golf ball shaped domes they're in look kind of cool from 10,000 feet. In comparison I think behavioral targeting is pretty benign. God help us.


 8:16 am on Sep 7, 2007 (gmt 0)

Good find shorebreak, from what I can tell this particular article [clickz.com...] talks about behavioral targeting being used on visitors that had not completed forms or sales on advertisers sites and were then advertised to regarding those same products or services which the advertisers had previously failed to convert them.

This article [clickz.com...] talks about an advertising campaign where visitors that had been to the diet and fitness section of a site in the last 45 days were then shown advertisements for a diet product even when they were visiting other non diet sections of the site and had great results from doing so.

I can see the value of behavioral targeting, but at this point it looks like a great supplement to contextual, certainly not a replacement. Behavioral targeting is going to work out well for Yahoo if they can effectively integrate BlueLithium into their PPC network.


 7:04 pm on Sep 10, 2007 (gmt 0)

behavioral targeting is pretty benign.

This is a very significant acquisition and possibly Yahoo's best acquisition ever. Google would have got it, but didn't because of its privacy policy.

[For more info, Google behavioral targeting google privacy]

Personally I don't see how Google will be able to maintain market share without changing its policy. However, it will be skittsh after the gmail problems when it served up ads related to email content a while back.

I just don't see millions of web users abandoning Google simple because of a new privacy policy that allows it to collect online behavior data, incl. what sites you visited and what you searched for. It is benign because most of us aren't doing anything illegal or crazy.

How many folks left Yahoo over its open data collection policy? Does anyone really care? And where will the Googlers go? And if you're going to see ads anyway, why not see ones that are likely to interest you?

An article on thestreet dot com suggested Google could rethink its privacy policy, but I think it's been much too slow on this to the point of dropping the ball, letting Yahoo get BlueLithium.

From a purely business point of view, the losses from not having a behavioral ad system will likely far outweigh any "good will" from being "strong on privacy."

It will never replace context, but it could still represent a huge chunk of revenue to the tune of billions of dollars. Of course you'll get contextual "refined" by behavioral, so the ad programming is based on context and fine-tuned by past behavior.

I would like to see some of Google's research to show what losses it projects from changing its privacy policy.

It's already half-way there, because searches on its ToolBar are stored in its data files, presumably for some kind of behavioral ad targeting. (Which most people probably don't realize.)

You know Google had that big policy on China, and then it flipped. I can't imagine it not flipping on privacy, too.

If behavioral ads become so successful in the future because of supergeeks developing this promising new field, and so much more successful than contextual ads, Google won't be able to compete with Adsense.

Looks like the YPN comeback is well underway.


"... behaviorally targeted ads accounted for only $350 million in spending during 2006, but that number is expected to grow to $3.8 billion in 2011, according to eMarketer."--TheStreet


 11:37 pm on Sep 10, 2007 (gmt 0)

Great post potentialgeek. Questions for you and others on this thread:

1)does life get harder for Ad.com & Valueclick now that Yahoo has bought Blue Lithium and Right Media and will probably try to retain more of the Yahoo remnant ad banner inventory in-house?

2)which ad network has, to date, been feasting the most on Yahoo remnant inventory? Ad.com?


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