SAN FRANCISCO - In its latest move to beef up its marketing muscle, Yahoo Inc. will sell most of the display advertising for England's leading online social network, Bebo.
The partnership, scheduled to be announced Wednesday in London, extends Yahoo's efforts to boost advertising revenue from other websites besides its own and snap out of a financial funk that has sapped its stock and shaken up its management.
Increasingly popular social networking sites like Bebo and the market leaders MySpace.com and Facebook.com are contributing to the Sunnyvale-based Yahoo's challenges in selling advertising on its own site.
As teenagers, college students and young adults have flocked to the social networks, advertisers have increased their spending at those hip hangouts instead of older, all-purpose sites like Yahoo.
The Bebo deal marks the first time that Yahoo has agreed to supply advertising to a social networking site. Yahoo had previously been feeding search results to Bebo. It now plans to begin funneling display ads to Bebo in the fourth quarter.
Two of Yahoo's biggest rivals, Google Inc. and Microsoft Corp., already have advertising partnerships with MySpace and Facebook, respectively.
While Google has been thriving, Yahoo has been struggling this year.
Yahoo's earnings fell nearly 7 percent during the first six months of this year, a factor that contributed to the June resignation of Terry Semel as the company's chief executive officer after six years on the job. Yahoo co-founder Jerry Yang is now trying to orchestrate a turnaround.
Working with Bebo will should broaden Yahoo's appeal with advertisers looking to connect with a younger audience. Citing data from comScore Media Metrix, Bebo said it reaches a monthly audience of 11.6 million people in England and Ireland.
Together, Yahoo and Bebo expect to reach about 75 percent of the United Kingdom's online audience. The two companies didn't reveal how they will divide advertising revenue under their new alliance.
"This exclusive partnership is the next step of our ongoing strategy to build the largest and most effective online advertising network," said Toby Coppel, managing director of Yahoo Europe.
As part of its expansion efforts, Yahoo has bought online ad exchange Right Media Inc. for nearly $700 million and plans to take over direct marketing network BlueLithium for $300 million.
Yahoo also has negotiated advertising partnerships with hundreds of U.S. newspapers, Internet auctioneer eBay Inc. and cable provider Comcast Corp.
Both Google and Microsoft also are trying to reach more Internet advertisers. Microsoft recently completed a $6 billion acquisition of online ad service aQuantive Inc., and Google is trying to win regulatory approval to buy DoubleClick Inc. for $3.1 billion.
