November 2, 2011, 2:23 PM

Yahoo to buy a digital advertising firm

The acquisition of Interclick could help Yahoo with its display advertising business.

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Yahoo Inc. said this week it will buy digital advertising firm Interclick Inc. in a deal expected to close in early 2012. Yahoo says it expects to pay $270 million for the company, which was founded in 2006 and whose targeting technology enables advertisers to figure out the best online placements and audiences for their ads. Yahoo plans to boost its display advertising business with Interclick’s technology.

“This investment underscores our focus on enhancing the performance of both our guaranteed and non-guaranteed display business across Yahoo and our partner sites and, combined with Yahoo’s reach and advertising leadership, will deliver a powerful solution for marketers," says Ross Levinsohn, Yahoo’s executive vice president for the Americas. "Interclick's innovative platform will allow Yahoo to expand its targeting and data capabilities to deliver campaigns with stronger performance metrics."

Interclick’s revenue in 2010 topped $101 million, up 83% from $55.3 million in 2009, according to the company’s annual report. Interclick’s products include Open Segment Manager and Genome Platform. “These solutions were built to address the fundamental challenges of audience targeting by enabling a more holistic understanding of consumers through its deep integrations with leading data providers,” Yahoo says in a statement.

The deal could indicate that Yahoo will not sell itself to another company, says Herman Leung, a senior analyst with Susquehanna Financial Group.  “While the deal size is small,  the fact that the company is using cash to build out its core display business could be signaling the company might be leaning toward not selling itself, but rather move forward to fix the business in the near-term instead,” he says.

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