Yahoo is to buy Santa Monica-based online ad network 5to1 for an eye-watering $28m, despite the company turning over less than $1m and losing $9m.
5to1, set up by former Fox Interactive Media executives, finds well-known brands to place in online publishers’ unsold ad inventory so they don’t need to discount it to just any old advertiser.
Which is all very nice for the publishers but no quite so good for 5to1 based on its numbers to date.
Yahoo advertising sales boss Wayne Powers says: “5to1’s innovative platform and premium private marketplace will further enable Yahoo! to extend our advertising leadership. 5to1 provides additional access to publishers and unlocks the value of unsold inventory for premium brand advertisers.”
Online ad companies often lose buckets of money in their early years of course but this still looks a brave one for Yahoo.