The circus may be in town, but it's business as usual at Yahoo! (Nasdaq: YHOO).
The dot-com headline grabber is teaming up with ad agency giant WPP (Nasdaq: WPPGY) to help beef up Yahoo!'s display advertising business. WPP will work through Yahoo!'s Right Media Exchange to sell Web spots to its clients.
The two juggernauts don't necessarily need each other. WPP has bulked up its online presence over the years, including last year's purchase of 24/7 Real Media. Yahoo! has overcome its paid search shortcomings, becoming a bigger force in display advertising through acquisitions of companies like Right Media and BlueLithium. However, it doesn't hurt to have more friends in high and faraway places.
Since most of Yahoo!'s traffic comes from areas that have been historically tough to monetize with higher-margin contextual ads -- like free email and news -- display advertising is a logical growth outlet for sponsors that want to expand their brand in cyberspace.
Hooking up with real world titan WPP isn't the first time that Yahoo! has gone old school. Yahoo! has a growing consortium of newspaper publishers -- now in the hundreds -- that has the search engine company working with local publications to cross-sell ads on newspaper websites.
This also isn't the first time that a search engine star and advertising heavy have hooked up. Google (Nasdaq: GOOG) entered into a marketing alliance with France's Publicis earlier this year.
The deal with WPP is obviously not going to slow Carl Icahn as he tries to clear out the Yahoo! boardroom. However, Yahoo! is well served in striking incremental deals like this between now and its summer shareholder meeting, if only to let its shareholders know that the company is serious about turning itself around with its current slate of directors.
The clock is ticking quickly. The big-top tent poles are being spiked into the ground.
