Yahoo's Revamped AT&T Deal Aligns with Display Ad Network Goal

  |  February 1, 2008   |  Comments

Yahoo's renegotiated deal with AT&T reflects the firm's mission to grow off-site display advertising.

Yahoo's renegotiated deal with AT&T reflects its mission to build its off-site display advertising business.

The multi-year renewed agreement essentially makes a once-reliable revenue stream for Yahoo less so, yet it could mean bigger bucks in the long run for the company, which is under pressure from investors. According to an original contract signed in 2001, Yahoo powered AT&T's broadband ISP portal, and received payment for each broadband subscriber. The renewed deal gives Yahoo a cut of search and display advertising revenue it serves on AT&T's Web and mobile sites. It also allows the telco's customers to access co-branded Yahoo mobile Web properties and the Yahoo Go app.

Despite getting between $300 million and $400 million upfront from AT&T in accordance with the renewed deal, Yahoo stands to lose at least $150 million as a result of it and a renegotiated agreement with Canadian broadband provider Rogers Communications, announced in November of last year.

Whether or not the altered terms of the agreements were initially favored by Yahoo, the firm is taking a glass-half-full attitude towards them. The potential to earn more through what Yahoo deems high quality traffic and ad revenue is what the firm has focused on in touting the renewed AT&T partnership.

"The revised relationship is inevitable, and the fact that Yahoo still has plenty of upside here is good news for both companies," said Peter Krasilovsky, program director, marketplaces for local media research firm Kelsey Group. Even Yahoo agrees altering the partnership to one based on ad revenue share is a sign of the times.

In 2007, Yahoo put increasing emphasis on its mission to build a dominant display ad network. Deals with an expanding group of online newspaper publishers, the acquisitions of ad networks Right Media and Blue Lithium, and an agreement to sell, manage and serve display and video ads on have set Yahoo on a firm path towards competing as a full-fledged display ad network.

Yahoo President Sue Decker elaborated on the company's aim to become a "must-buy" for advertisers during its Q4 2007 earnings call with investors earlier this week. "To differentiate and innovate, which is what is now occupying a much greater share of our development and investment dollars, we are intensely focused on improving product excellence and relevance across our key starting points, building an off-network, integrated display product in a scaled, open exchange that reduces friction for all and increases pricing and liquidity for inventory owners," she said.

The renewed contract also makes AT&T-owned the primary online and mobile local search provider for AT&T subscribers., like Yahoo Local, offers local business directory information and consumer reviews.

The mobile component of the new deal, giving AT&T subscribers access to co-branded Yahoo mobile Web properties and Yahoo Go, could "gain a lot of importance in year three and beyond of this contract," said Krasilovsky. "We should remember that AT&T is the exclusive [carrier] of Apple's iPhone; it will be interesting to see how Apple manages its relationships with Google and with Yahoo," he continued. Apple's iPhone enables Yahoo and Google search along with other apps from the rival companies.

ClickZ Live Toronto Twitter Canada MD Kirstine Stewart to Keynote Toronto
ClickZ Live Toronto (May 14-16) is a new event addressing the rapidly changing landscape that digital marketers face. The agenda focuses on customer engagement and attaining maximum ROI through online marketing efforts across paid, owned & earned media. Register now and save!*
*Early Bird Rates expire April 17.


Kate Kaye

Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.

COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.



Featured White Papers

ion Interactive Marketing Apps for Landing Pages White Paper

Marketing Apps for Landing Pages White Paper
Marketing apps can elevate a formulaic landing page into a highly interactive user experience. Learn how to turn your static content into exciting marketing apps.

eMarketer: Redefining Mobile-Only Users: Millions Selectively Avoid the Desktop

Redefining 'Mobile-Only' Users: Millions Selectively Avoid the Desktop
A new breed of selective mobile-only consumers has emerged. What are the demos of these users and how and where can marketers reach them?


    • Contact Center Professional
      Contact Center Professional (TCC: The Contact Center) - Hunt ValleyLooking to join a workforce that prides themselves on being routine and keeping...
    • Recruitment and Team Building Ambassador
      Recruitment and Team Building Ambassador (Agora Inc.) - BaltimoreAgora,, continues to expand! In order to meet the needs of our...
    • Design and Publishing Specialist
      Design and Publishing Specialist (Bonner and Partners) - BaltimoreIf you’re a hungry self-starter, creative, organized and have an extreme...