Yahoo Reveals (Some) Details About Its Ad Plans

February 26, 2008, 9:27 am
Yahoo Reveals (Some) Details About Its Ad Plans
By Saul Hansell

The meat of the presentation by Jerry Yang, chief executive, and Sue Decker, president, of Yahoo at the Interactive Advertising Bureau’s convention Monday was a new advertising system called Apex (for Advertiser Publisher Exchange).

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The key benefit that Ms. Schneider said Yahoo would give publishers was the ability to have more pages on which their existing sales force can sell ads. In the case of the newspaper deal, local papers will be able to sell bundles that include ads on visitors to the newspaper site and other people on Yahoo’s network that it can identify as living in the local area.

The behavioral targeting ambitions can be seen in a different deal that Yahoo cut last year with WebMD last fall. Under this scenario, users who visit WebMD will be tagged, presumably through a cookie on their browsers. Later, when those users visit Yahoo properties, they can be shown ads that are sold by WebMD (rather than Yahoo). Since WebMD knows what conditions they are interested in and has relationships with health care companies interested in people with those conditions, it presumably can sell the ads for more money than Yahoo could.

These deals are interesting because they are the reverse of the typical advertising network arrangements in which networks buy the unsold pages from publishers at low rates. Here Yahoo is giving some of its pages to publishers to sell high rates, presumably because they have data about users and relationships with advertisers.

It also shows some ways that Yahoo can open its traffic and its vast trove of data about users to other players.

Analysis/Questions:

• Newspapers gain simplified ad serving and coordination; and save labor costs. Since it is easier for advertisers to buy direct, do they dis-intermediate themselves from ad buyers?
• Newspapers gain more local impressions. Do they need more inventory? Have they already sold their existing inventory?
• Yahoo takes over sales of non-local impressions. Is this the same as the remnant market of hundreds of advertising networks?
• Targeting brings higher eCPM's. Would an auto dealer pay 10x higher to target the 10% who are ready to buy a car? If not, does targeting reduce the total dollars spent by the auto dealer with the local paper? If the auto dealer pays 5x more, the newspaper makes less, but uses 10% of inventory to satisfy the advertiser. Does this create more unsold inventory at the expense of lower ad dollars?
• Video brings higher eCPM's. Is the newspaper staff ready to support the creative needs of local advertisers?

The net is that newspapers gain more inventory and become the local ad reps for Yahoo.

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