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Aug. 15, 2007 at 9:18am Eastern by Greg Sterling
Will 'SmartAds' Give Yahoo An Edge In Online Display Advertising?
The Wall Street Journal explores Yahoo's recently debuted "SmartAds" (prior coverage here), which mix behavioral targeting with other forms of targeting and dynamic elements to deliver a reportedly better response to display advertisers. The new ad platform was tested in Yahoo Travel and reportedly performed well (2x to 3x CTRs of normal display ads) and will be rolled out to other areas of the Yahoo site over time.
From the WSJ article:
Using SmartAds, advertisers provide Yahoo with sets of backgrounds, images and text that can be mixed and matched on the fly to create an all but unlimited number of different ads. The approach combines technologies Yahoo developed itself with others it acquired. Bringing together this creative zip with the ability to target users based on interest and location, brings to display advertising the flexibility and direct-response qualities that have fueled the boom in search advertising. Yahoo hopes SmartAds will help it gain ground in the rapidly expanding market for behaviorally targeted ads, which is expected to jump to $1 billion in the U.S. in 2008 from $575 million this year, according to eMarketer.
Yahoo recently consolidated search and display advertising under David Karnstedt, who runs North American ad sales at Yahoo. The company also recently released research showing a lift when search and display ads are used together as part of an online ad campaign.
The "creative assembly platform" described in the article excerpt above is perhaps the most interesting aspect of SmartAds. But behavioral targeting, which is the current rage in online advertising (AOL recently bought Tacoda), is gaining new scrutiny even as its stock is rising. In November, the U.S. US Federal Trade Commission is holding a forum in Washington, DC to address consumer and privacy groups' concerns "raised by the practice of tracking consumers’ activities online to target advertising."
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By Greg Sterling
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I think this innovation should be welcomed in the online advertising community. Many have commented that there's a privacy concern surrounding these new Yahoo ads. However, I would argue these are no more invasive of our privacy than demographic targeting or click history tracking currently being employed by the other engines.
I provide a counter-argument to the privacy concern on my blog - http://ppc-outpost.blogspot.com/. Feel free to have a read and let me know if you agree.
In terms of Yahoo's execution, I would point to examples like Yahoo Local to show they can produce something good when they put their mind to it. However, it's true that there's a Yahoo Sponsored Search and Yahoo Answers for every one Yahoo Local ;-)
To answer your question, yes ... if they can execute.
However, they have executed so poorly on everything else over the past several years, I do not see this panning out either.
Yahoo! would have to be able to handle all of the hidden costs that come along with this: customer service, technical support, expertise, understanding, quality reporting, etc.
They are not handling those well in Sponsored Search, so I can not imagine this will be any better.