Yahoo, Battling Google, Wins Big Viacom Ad Deal
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Wednesday, April 11, 2007
Viacom said yesterday that it picked Yahoo as its online advertising partner in a multi-year deal that could help Yahoo become a more formidable challenger to Google -- Viacom's opponent in a legal squabble over video copyrights.
Small text-based ads will appear next to search results and other relevant content on 33 Web sites owned by Viacom, including MTV.com, VH1.com, ComedyCentral.com, Nickelodeon.com and BET.com. The deal is a victory for Yahoo, which has been losing ground to Google in the online advertising business.
Financial terms of the alliance were not disclosed. With the prevailing commissions in the Internet industry, Viacom would get 70 to 80 percent of the revenue generated from the ads.
The friction that apparently helped bring together Viacom and Yahoo adds an intriguing twist to the marriage.
Viacom sued Google last month, seeking $1 billion in damages and alleging that the online search leader's video-sharing site, YouTube.com, has been repeatedly violating copyright law by showing clips from Viacom's shows without permission.
Google, which bought YouTube for $1.76 billion in November, says the video site has obeyed the law by removing copyrighted material whenever asked.
Competitive tension between Yahoo and Google has been building for years. Although it was one of the Internet's first success stories, Yahoo has since been eclipsed by its younger rival.
Propelled by the Internet's largest advertising network, Google last year earned $3.1 billion, compared with Yahoo's $751 million profit. Google's a market value is $145 billion, compared with Yahoo's $43 billion.
Google's growth has been bolstered by advertising alliances with some of the Web's most trafficked sites, including AOL.com, MySpace.com and Ask.com. The Ask contract is set to expire at the end of the year.
Yahoo hopes to close the gap with Panama, a recently introduced advertising formula. The Viacom contract is Yahoo's first major distribution agreement since Panama was introduced in February.
