Yahoo pays $28M for unprofitable online ad service

By the Associated Press | May 18, 2011 | 6:28 PM EDT

SUNNYVALE, Calif. (AP) — Yahoo has bought an unprofitable online advertising service called 5to1 Holding Corp. for $28 million as part of an effort to revive its revenue growth.

The deal announced Wednesday provides Yahoo with more tools to place online ads for big companies looking to promote their brands.

About 20 websites work with 5to1 to sell their unused advertising space. Those efforts haven't been fruitful for 5to1, which has been losing money since its 2008 inception.

Last year, 5to1 lost nearly $9 million on revenue of less than $1 million. The company, based in Santa Monica, Calif., had 19 employees, including five sales representatives, as of March, according to a regulatory filing.

Yahoo Inc.'s earnings have risen recently, but its ad revenue hasn't kept up with the rest of the Internet.