NEW YORK (Reuters) - Yahoo Inc said on Tuesday it bought Maven Networks Inc, a provider of online video technology, for about $160 million to expand its ability to sell advertising alongside Web clips.
The deal will help Yahoo and its network of Web partners deliver video to sites and sell advertising within and around the clips, in a challenge to the Internet video advertising being offered by larger rival Google Inc through its site YouTube.
Maven already distributes and manages video for more than 30 major media companies, from News Corp’s Fox News to Gannett Co Inc, expanding Yahoo’s existing relationships with Web publishers.
“It’s the fastest-growing segment of the online ad marketplace,” Hilary Schneider, Yahoo’s executive vice president of global partner solutions, told Reuters. “This deal really creates one of the most robust video platforms in the industry.”
Yahoo announced the deal as it considers a $42 billion unsolicited takeover offer from software maker Microsoft Corp. Yahoo rejected the bid as too low on Monday, a move many on Wall Street believe will lead Microsoft to eventually raise its offer.
Schneider said the Maven acquisition will help Yahoo sell ads on video inventory together with its existing sales of search terms and display ads like banners. The company cited a forecast from research firm Forrester that U.S. online video advertising alone will grow to more than $4 billion in 2011.
Maven does not sell advertising space, but has developed ways of providing an overlay of advertising on Web video clips, or embedding an ad element into a video that a user can interact with.
The company also advises marketers how to best place an ad within a video to appeal to viewers, rather than annoy.
“They have started making inroads into new kinds of formats that we can utilize to make video advertising much more compelling over time,” Tim Cadogan, senior vice president of Yahoo’s marketing products division, said in an interview.
“Our selling capabilities can layer on top of that,” he said. “There’s lots of demand. Lots of advertisers want to get into video ... but how do you aggregate more supply.”
Maven is based in Cambridge Massachusetts.
Yahoo shares fell 1 percent to $29.57 on the Nasdaq.
Additional reporting by Varsha Tickoo in Bangalore