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Tyroo Banks at Yahoo!

By Rick Munarriz – Updated Nov 14, 2016 at 10:41PM

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Yahoo! nibbles away at India's online-ad market.

Yahoo! (NASDAQ:YHOO) is getting hungry in India, but it's in no hurry for the curry. The online giant is acquiring a 35% to 50% stake in Web advertising enabler Tyroo for an undisclosed amount.

Sure, Tyroo isn't as sexy a name in India as Web service provider Sify (NASDAQ:SIFY) or the popular portal Rediff.com (NASDAQ:REDF), but it will give Yahoo! exactly what it needs: a platform preloaded with advertisers and publishers.

Tyroo serves up targeted ads -- text and graphical -- across a collection of 1,200 third-party sites. Like similar contextual-marketing programs run by Yahoo! and Google (NASDAQ:GOOG), sponsors bid a set amount for each generated lead until their allocated budgets run dry.

With less than 2% of India's 1.2 billion citizens having regular computer access, online advertising isn't much of a priority in India right now. Many sponsors don't even have working websites. Tyroo can work with that, sending off emails or wireless text messages to advertisers when someone is interested in what the sponsor is offering.

Like a lot of India's infrastructure, companies such as Yahoo!, Rediff, and Google know that this is a developing market that will take years before approaching its true potential. Widespread Internet access and chunky disposable income aren't going to happen overnight. However, Yahoo! can't afford to be asleep at the wheel even in a seemingly sleepy market.

Yahoo! and Google were slow to roll into China, a hot market where local favorite Baidu.com (NASDAQ:BIDU) commands nearly two-thirds of the search market. India isn't packing that kind of market-sentiment octane. India Fund (NYSE:IFN), a closed-end fund that specializes in buying Indian stocks, is trading nearly 30% below the all-time high that it set back in May of last year.

But good things sometimes come to those who wait, especially those who plant the flag early. At the very least, the price of admission is typically much lower than the cover charge applied to the late arrivals.

For Foolish coverage of Yahoo!'s earnings:

Yahoo! is a Stock Advisor recommendation. Baidu has more than doubled since being singled out last year to Rule Breakers subscribers. Our Global Gains newsletter identifies stellar companies in emerging international markets such as India. Start up a free 30-day trial to any of these newsletters, with no strings attached.

Longtime Fool contributor Rick Munarriz is fond of India's growth potential. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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