SAN FRANCISCO (Reuters) - Embattled Yahoo Inc has struck an advertising partnership deal with WPP Group that will let WPP buy ads on Yahoo's online ad exchange, the companies said late on Thursday.


Yahoo, which recently spurned a $47.5 billion unsolicited takeover bid from Microsoft Corp only to face a proxy battle led by activist investor Carl Icahn this week, said the deal would first involve WPP units GroupM and 24/7 Real Media.

In a statement, the companies said that as part of the deal, WPP advertising agencies would, through its 24/7 Real Media arm, develop a proprietary advertising media trading platform that takes advantage of Yahoo's Right Media exchange.

Yahoo acquired Right Media last year in a bid to expand sales of the online display advertisements preferred by corporate brand marketers beyond its existing base of blue-chip clients to social network sites and other sites off Yahoo.

"More and more, we see the need for agencies and media and technology companies to work together to create a new level of value," said Mark Read, director of strategy and chief executive of the London ad conglomerate's WPP Digital unit.

WPP will also work with Yahoo to develop a WPP marketplace, giving WPP's ad agencies wider access to potential advertising inventory, or places to advertise, across the Internet, as well as insight into how to buy ads cost-effectively for clients.

The WPP-Yahoo marketplace will also be open to outside publishers, helping to increase the overall volume, while cutting the costs, of the WPP ad-trading marketplace.

(Reporting by Eric Auchard, editing by Will Waterman)
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