Yahoo’s $300 million cash acquisition of behavioural targeting network BlueLithium follows AOL’s $275 million purchase of behavioural firm Tacoda. BlueLithium should strengthen Yahoo’s position in off-Yahoo advertising–which has been weak–and should also broaden the company’s behavioural targeting capabilities. Users who search for “flowers” on Yahoo will now presumably be tracked on all of BlueLithium’s sites, as well.
The acquisition makes sense strategically, but we believe it comes with litigation and perception risk. We continue to expect that “behavioural targeting”–in which publishers and ad networks place cookies on users’ PCs and gather data on what they do–will eventually experience a bout of intense press and government scrutiny. The idea that some Big Brother entity is watching, analysing, and capitalising on everything you do does not sit well with the American public, and the fact that this information is not tied to”who you are” will not reassure people (Congressional sound bites can make anything sound scandalous, and this will be easier than most). As behavioural targeting goes more mainstream, the perception risk will increase.