Yahoo has continued its pursuit of online ad rivals with a $300m purchase of private online advertising firm BlueLithium.

BlueLithium offers banner advertising on a network of about 1,000 sites, which will help extend Yahoo's ad reach as it continues to challenge Google's and Microsoft's online ad offerings.

The deal is for cash and is expected to close at the end of the fourth quarter of 2007, Yahoo said. BlueLithium will become a Yahoo subsidiary once the acquisition is completed. It will be integrated with other Yahoo ad offerings, including the Yahoo Publisher Network and the Right Media Exchange.

Increased competition in the online advertising market between Yahoo, Microsoft, and Google has led to a series of acquisitions by all three companies. Yahoo has struggled over the past year, reporting disappointing second-quarter financial results and a decrease in net income over the same period in 2006. The company has also spent almost a year reorganising both its top management and its business divisions.