Yahoo CEO Marissa Mayer and her second-in-command, Henrique De Castro, are taking a long look at the world of ad tech startups with an eye toward buying one or two of them.Their aim is to buy ad tech that will help Yahoo charge higher rates for its inventory by allowing marketers to target specific types of people with their ads.
Helping Mayer and De Castro in this hunt is Yahoo’s senior vice president of advertising and platforms, Scott Burke.
Thanks to two sources close to Burke, we know the two companies he would most like Mayer and De Castro to buy for Yahoo.
They are: Turn and MediaOcean.
Burke, we’re told, strongly lobbied for their acquisition and combination under Yahoo’s brand as recently as this past summer. (At the same time, he opposed a proposed deal with another ad tech firm, AppNexus.)
Burke has a lot of influence at Yahoo, as he speaks for the company’s ad tech engineers. Mayer listens to engineers. She’s one of them.
Turn is what the industry insiders call a “demand-side platform” or DSP. It allows ad-buyers to look for, and buy, ad space on the Internet that will be seen by Web users in specific demographics or with particular Web browsing histories. (Turns out it’s profitable to show Nike ads to people who have recently gone to Nike.com.)
MediaOcean is the product of a recent merger between two companies: Media Bank and Donovan Data Systems. Its business is providing the software that advertising agencies use to buy their magazine, TV, and online ads for clients. It’s enterprise software. About $130 billion worth of ad spending courses through the platform (though MediaBank doesn’t see any of that money … yet).
Turn and MediaOcean serve entirely different types of advertising buyers. Turn is mostly a product for marketers who want to reach consumers with an ad for a product that will allow those consumers to buy the product then and there. These are “demand-fulfillment” advertisers. The agencies that use MediaOcean are, for the most part, the kind that make ads that are supposed shape the way consumers think about brands. They are “demand-creation” advertisers.
Burke’s grand vision, we’re told, is that combining Turn with MediaOcean inside Yahoo will give the company access to the entire world of advertisers. Turn’s technology would, in an instant, make Yahoo’s own inventory more valuable. Yahoo could perhaps also use it to make other Web sites more valuable, and get a piece of the action. MediaOcean, meanwhile, would be Yahoo’s Trojan horse into the world of TV ad buying.
We’ve heard two big objections to Burke’s plan from Yahoo watchers and Yahoo insiders.
- Advertisers, who are Yahoo’s clients, don’t want Yahoo to also provide their technology for ad-buying. Instead of a DSP, Yahoo is better off buying a company that helps publishers make more money through their advertising with similar technologies.
- Yahoo already has tech that can do what Turn does, thanks to recent acquisitions like Interclick – now known as “Genome from Yahoo.”
All that aside, the other big reason Turn and MediaOcean are not likely to be acquired and combined by Yahoo is that doing so would cost several hundred million dollars. Mayer has said that she’s not likely to spend that much money on an acquisition.
In late November, a source inside Yahoo told us more likely Yahoo acquisitions are Rubicon and PubMatic. (We’ve since heard that interest in PubMatic has slipped.)
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.