Here’s why Yahoo needs a new CEO pronto. Its ad sales problems run so deep that it felt the need to spend $270 million on an ad network. Apparently, these are the kinds of things that happen when nobody is minding the store.
Just weeks after touting its broad reach and its brand potential and its original content prowess during Advertising Week in New York — a week during which Yahoo announced a partnership with ABC News
and rolled out 15 original Web series
featuring Hollywood actors like Judy Greer — here was Yahoo on Tuesday announcing it had purchased Interclick, a middling ad network far down most media plans. It begs the question: what is Americas evp Ross Levinsohn thinking exactly, if he is behind this move? David Kenny may be out of the consideration set. But Yahoo’s board better get somebody in place soon to figure out just where this company is going.
There’s nothing wrong with Interclick per se. By all accounts it’s a solid network with a reputation for good targeting capabilities and a good sales force. Like Casale and ValueClick and many others, it reaches over 120 million unique users or so, per ComScore. Still there is also nothing distinctive or game-changing about the company that would seem to make it worth $275 million, particularly given the way the wind is blowing in the online ad world. The big ad network era is seemingly over, with audience-based, machine-driven buying eclipsing ad networks. You know, ad exchanges like the one Yahoo operates — Right Media.
Does Interclick have any proprietary products, tech or targeting tools to help it endure this transition away from ad networks? Of course the company says it does. But it’s often hard to tell how it’s different from many others.
Interclick has until now mostly been known for getting into hot water, whether it’s been accused of privacy violations
its partnerships. Strange company for Yahoo to keep given its current state.
Yahoo, like most of the 1990s Web giants, has a history of acquisitions that go nowhere, and Interclick may eventually follow the same course. Remember Blue Lithium, an ad network Yahoo snagged in 2007
? At the time, we were told how Blue Lithium wasn’t just another ad network and how it was bringing hot-shot behavioral targeting to the table. How did that work out exactly?
Among the initial theories talked up on Tuesday following Yahoo’s announcement was that Interclick either provided Yahoo with advanced data-targeting opportunities or that it would provide bodies and infrastructure to bolster Yahoo’s hurting sales force. If either theory is correct, Yahoo is in more trouble than many could have imagined.
Per Yahoo’s press release: “Interclick’s proprietary advertising and technology solutions enable it to dramatically improve data targeted solutions and optimized returns for advertisers across a variety of pooled premium supply sources.” So Interclick offers premium inventory, targeting and optimization? Sounds like claims made by every ad network on the face of the earth.
Meanwhile, Right Media should negate the need for all this. The company has been touted as an outlet for long-tail inventory, a private exchange, a sophisticated real-time buying platform. If Yahoo needs Interclick to better sell its remnant inventory, and for some reason finds its targeting capabilities that much better than what it has in-house, why should anyone ever believe anything Yahoo says about Right Media again?
Apparently, Interclick sold Yahoo on its ability to sell audience segments. Wait, Yahoo, with all its registered email users and years of investment in ad-targeting tools can’t do that? Actually, no said Darren Herman, chief digital media officer at Kirshenbaum Bond Senecal + Partners.
“This was a smart move for Yahoo if they want to sell data and audiences which they don’t currently do,” Herman said. “They will be going up against Google soon when the company gets more serious about its own data targeting tools and Yahoo needed to counter that. Interclick was relatively cheap and painless.”
In fact, according to Web publishing veteran Peter Horan, executive chairman of Halogen, Yahoo’s ad tech is 10 years old, while Interclick’s is solid.
A side note: What does this deal say about Yahoo’s gestating sales pact with AOL and MSN
, which was supposed to be about pooling premium inventory? Supposedly, Yahoo has been pushing Right Media to serve as that triumvirate’s tech platform (while Microsoft has been pushing AppNexus). How does that look now?
If, on the other hand, the Interclick purchase was all about strengthening sales, sheesh, aren’t there easier and better ways to do that? After Digiday broke the news
that Yahoo’s sales staffing issues were even worse than ex-CEO Carol Bartz had let on, the company said that it had made several key hires to fill in the blanks. But one buyer told Digiday yesterday that even though Yahoo has brought on some more sales executives, its internal sales and account teams are spread far too thin to manage basic business needs.
So Yahoo now has Interclick to fill those holes. Has Interclick been harboring some all-star digital sales team that nobody seems to know about? Understanding that some acquisitions are about talent as much as they are the company involved, this isn’t exactly Facebook purchasing Hot Potato.
Maybe Yahoo should have just shelled out big money for an all-star sales force. It probably would have money left to spare.
However, Horan defended the acquisition-for-hire move. “It is tough to hire people in the Valley,” he said. “Even great companies like Google and Facebook are doing team acquisitions at $1 million per engineer. For Yahoo, it is even harder to get and keep good talent. All the best sales managers have left, and without them, a lot of the best sales people have left too. This is a legit way for them to buy talent and technology. It’s not a big bet either against Yahoo’s market cap or their cash balance.”