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.”