Yahoo Purchases Luminate to Boost Ad Business

In an attempt to bolster falling display ad sales, Yahoo has purchased Luminate, a start-up that focuses on interactive, image-based advertising. The move could mean better targeted display ads for Yahoo advertisers.

Luminate is a content publishing service that allows advertisers to overlay images with mouseover tabs for shopping along annotations from the publisher. The company also makes it easier for customers to share images or parts of images on Facebook and Twitter. According to their website, the service has 180 million users and more than 6 billion image views each month.

Damon Ragusa, chief executive (CEO) of ThinkVine, believes that Yahoo intends to use the acquisition to improve the company’s ad offerings. Yahoo’s display ad sales have fallen 7 percent from last year as the company struggles to keep up with Google, Facebook, and Twitter.

Ragusa says, “The brands advertising with Yahoo will win” as a result of the purchase because “Luminate drives better performance of display ads.”

While the move seems like an advantageous one for Yahoo, it is still somewhat unclear as to what the multinational Internet corporation plans to do with the technology it has acquired. In a blog post announcing the news, Luminate said that it would be immediately pulling the plug on its in-image services. The company’s 10,000 publishers have until October 1 to access their accounts until those are shut down as well.

So will Yahoo incorporate Luminate technology into its own ad offerings or will it kill the service indefinitely? We’ll have to watch this space to find that one out, it seems.

It also remains to be seen whether or not Yahoo will implement Luminate’s innovative payment model, which charges advertisers based on ad performance. “If Yahoo extends the pay-for-performance model,” Ragusa says, “then I think the brands win twice.”

In a further move, Yahoo has also launched Yahoo Recommends, which allows publishers to offer personalized content recommendations that adjust to site layouts on both PC and mobile. Recommendations are powered through Yahoo Gemini, the site’s own mobile search and native ad marketplace. This launch marks the first time the platform has served ads outside of Yahoo’s own site.

Yahoo’s official blog says that the feature “makes it easier for visitors to discover a publisher’s content and integrates an additional native advertising unit onto their site.”