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Yahoo invests in two online ad companies

Yahoo buys AdInterax, which makes tools for creating multimedia ads, and is joining the Right Media Exchange.

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Candace Lombardi
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Candace Lombardi
In a software-driven world, it's easy to forget about the nuts and bolts. Whether it's cars, robots, personal gadgetry or industrial machines, Candace Lombardi examines the moving parts that keep our world rotating. A journalist who divides her time between the United States and the United Kingdom, Lombardi has written about technology for the sites of The New York Times, CNET, USA Today, MSN, ZDNet, Silicon.com, and GameSpot. She is a member of the CNET Blog Network and is not a current employee of CNET.
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Yahoo announced investments in two Internet advertising companies on Tuesday as it vies for a larger slice of the market.

Yahoo is acquiring AdInterax, which offers tools allowing marketers to create multimedia ads that Yahoo will integrate into its existing services for advertisers. Financial terms were not disclosed.

"We're moving into this space because we feel the rich media experience should be more ubiquitous," said Todd Teresi, vice president of global sales operations for Yahoo. "It provides tremendous depth of engagement, and enhances user experience, and drives effectiveness into the markets. And it drives efficiency on the network."

Previously, Yahoo worked with third-party providers of multimedia technology to place rich media ads--those containing motion, sound or video--within its network of sites for advertisers. The company will continue to do that, but will include its own rich media technology services for free as part of an advertiser's marketing buy with Yahoo, Teresi said.

Separately, Yahoo led a $45 million Series B financing round in Right Media, which operates a real-time online ad auction network called the Right Media Exchange. The investment gives Yahoo a 20 percent stake in Right Media. Redpoint Ventures and existing investors also participated.

Yahoo is joining the Right Media Exchange, allowing advertisers to bid on its non-premium banner or display ad inventory. Yahoo will also name someone to serve on Right Media's board of directors. The exchange has more than 11,000 buyers and sellers.

Right Media launched its automated online ad exchange in June. The exchange lets Web sites auction off display ad space to the highest bidder rather than having to go through ad agencies or networks, like Yahoo Publisher Network or ValueClick, which set prices and take a cut.

Yahoo, which reports third-quarter results on Tuesday after the close of market, has delayed the release of its new online advertising platform until the fourth quarter.

The ad investments come amidst Yahoo's warning that a decline in ad sales from the auto and financial industries will be reflected in the company's earnings report. Analysts have been debating whether the announcement is indicative of ad dollars splintering to other sites, a change in the online advertising market, or the overall economy.

Display advertising, which includes rich media, made up 34 percent or $4.3 billion in ad revenue for Internet advertising in 2005, according to the Interactive Advertising Bureau.

"Depending on the sophistication, ad agencies are usually the first to adopt, but we do expect over time that the entire customer base will use rich media to drive more effective marketing," said Teresi.