New York is Getting Techy

I spent last week in New York at Ad Tech 2011 and was really impressed to see how the city is embracing  new online marketing and advertising startups. Many of the best internet advertising companies were founded in New York. If you take a look at them you can see that they all work with display advertising. This is not a coincidence: New York's Times Square is very influential in this space.

The internet display advertising business is experiencing a new revolution of its business model. If innovation continues and regulators let the sector evolve, display advertising will catch up to search advertising in the next few years in terms of profitability for advertisers. If this happens, online media will have the chance to increase their revenues and create better online content and user experiences. New technologies like Real Time Biding (RTB) are disruptive and will increase the advertising expenditure of agencies and big advertisers in the online display sector.

Thinking about New York and the revolution of the display advertising business model, Yahoo! comes to mind. Yahoo! has a tremendous internet audience based on content and user engagement. They are not strong enough in the search business, but if the display business continues to grow Yahoo! could have a bright future.

So thinking about Yahoo's possible bright future, maybe this US company is too big to leave in foreign hands. After seeing the interest of Jack Ma from Alibaba in buying Yahoo!, this story has taken on major relevance in the US. Microsoft was the first company that tried to buy Yahoo! but they are not interested in another bid.

The best candidate right now for a new US buyer is Google, the advertising cash cow. Google is better able to monetize the Yahoo! ad inventory than Microsoft and Yahoo! and Google needs to keep their users on their online properties longer to compete against Facebook. Yahoo! will provide Google the online content that the search engine doesn't have.

But other big US internet companies will have something to say about this acquisition and the regulators will need to approve it. Maybe that is why Google is studying the acquisition with other investors. That could help avoid anti-trust issues. And let's not forget the problems that Google had in China in the past years. This could be a driver in Google's ambition to keep Alibaba from buying Yahoo!

We will see how this story ends, but display advertising is gaining momentum and Yahoo! could be a winner in this new secenario. Time to buy Yahoo! shares?