Yahoo Trying To Make Display More Like Search

We’ve known for some time, based on a number of studies from Microsoft, Yahoo, SEM firms and ad networks, that an online ad campaign that includes both display and search performs better than one that features only display or search. In another version of that same theme, Yahoo recently said that it was using search queries as part of its larger behavioral targeting efforts across its display network. In other words, search queries become part of the targeting data that inform what display ads are shown to users thereafter.

Display advertising has been battered in this recession despite plenty of empirical evidence that it works as a branding medium and as a stimulus for search behavior. Behavioral targeting (BT) has been the subject of a great deal of focus over the past two or so years as a way to revive display advertising by boosting its performance. Yahoo is one of the big practitioners of BT and is arguing that it is starting to see search-like performance from some of its display campaigns.

Those campaigns are using all the complex layers of targeting that Yahoo offers (geo, BT, demo). In addition, the company is presenting different creative elements and copy to users in the context of that targeting through its dynamic SmartAds platform. SmartAds was launched in 2007 originally. At the time it launched I wrote about it:

Yahoo has been offering these various flavors of targeting, including behavioral targeting, for some time. The really new thing about SmartAds is the “creative assembly platform,” for which Yahoo has applied for a patent. The idea, according to Paez, is to take “templates” of advertiser-generated creative (e.g., copy, logos, graphics) and assemble those elements dynamically depending on the targeting opportunity. An 18-year-old woman in New England looking for hybrid vehicles, for example, might see a different ad from the same marketer than a 50-year-old male in Texas.

It’s really a form of quasi-real time multivariate testing (if that makes sense). As indicated, the Yahoo Search Marketing blog reports that SmartAds see search-level ROI:

So far, advertisers testing Smart Ads have seen significantly improved campaign performance based on a variety of metrics, including click performance, conversion and overall return on investment.

For example, after executing several Smart Ad campaigns with Yahoo! and its partners, Hewlett-Packard saw a return on ad spend that was more than 20 times higher than their traditional display campaigns, and on par with their search marketing campaigns.

Yahoo is now starting to bring third parties into the SmartAds program as part of its larger YOS initiative:

The program now helps deliver Smart Ads at greater scale by combining Yahoo!’s reach and user knowledge with innovative ad-serving technology from third-party providers. Smart Ads is an open platform, but Yahoo! is initially working with two partners, Teracent and Tumri, to make Smart Ads available to PC and mobile advertisers.

Accordingly Yahoo’s SmartAds also extends to mobile, where dynamic ad serving and changing creative based on location and other variables are actually critical to realize the “LBS opportunity.” As I wrote on the Local Mobile Search blog:

Agencies and marketers can’t create 300 separate ad units for every major city and ad copy permutation. Thus being able to deliver the right ad with the right copy on the fly is critical to creating the “inventory” required to capitalize on LBS whether online or, even more importantly, in mobile.

Though there are potential privacy issues that loom on the horizon for BT and the advanced targeting methodologies that SmartAds embody, it represents the future for both online and mobile display advertising.