Yahoo Platform Targets Google, Microsoft in Online Ad Market

 
 
By Clint Boulton  |  Posted 2008-08-08
 
 
 

Yahoo Platform Targets Google, Microsoft in Online Ad Market


While Yahoo's management team may be stinging from shareholders' criticisms in the wake of some questionable vote counting at its board meeting, its lieutenants are preparing the company to combat Google and Microsoft on the online advertising battlefield.

Yahoo in April unveiled its chief weapon for this fight in the form of an all-in-one ad management platform that will eventually let advertisers buy search, display, local, mobile and video ads from one location.

The platform was then called AMP, but Yahoo agreed to cease using the moniker after Collective Intelligence claimed a trademark on it. Yahoo has not revealed the new name.

The platform is a departure from traditional practices by Google, Yahoo and Microsoft, which sold ads in different buckets based on ad type.

The platform also reinforces advertising as the single greatest cash cow on the Internet, becoming just as valuable, if not more, than other forms of advertising are to e-commerce's brick-and-mortar brethren. Online advertising is the greatest driver of business on the Web.

Mike Walrath, senior vice president of Yahoo's Advertising Marketplaces Group, discussed how the platform will change the online advertising game in an interview with me earlier the week of Aug. 4.

"We want to dramatically simplify the process of buying and selling ads online," said Walrath, who was CEO of Right Media before Yahoo acquired the remainder of the company for $680 million in July 2007.

Walrath said current ad management systems, including Google's DoubleClick DART system and Microsoft's Atlas platform, haven't done much to make the buying and selling of media easier. That was fine in the beginning of the Internet.

Gone are the early days of just offering text and display ads. Walrath noted that in the last 10 years, the market has fragmented into multiple demographics and multiple ad formats, including mobile ads and video ads. Walrath said:

The key for advertisers is that as their audience fragments, and the consumption shifts to hundreds of thousands of potential sites where audiences are going to be consuming content, it's just not as simple as it once was for advertisers to go out and buy the right audience. 

For example, while advertisers were once clear about which online news publications to target, blogs have clouded the situation, providing another ocean in which consumers can fish for content. Rather than confusing people with separate tools, Yahoo wants to funnel them through a single location.

How Yahoo Platform Will Beat DART, Atlas


The platform's tools will provide more precise geographic and demographic targeting across the Yahoo network and its partners, as well as for any advertiser or publisher. The idea is to increase ad relevancy at a time when online ads are miscast for the wrong people.

The platform interface will let advertisers peek into the marketplace of thousands of sellers and identify the specific niche audience they are looking for. Then, in minutes instead of hours or days, advertisers will see available inventory, reserve it and book a campaign against that inventory.

"That's really the level of change we're shooting for," Walrath said. "The ability to take something that would take weeks of man-work and shrink it down to minutes." 

Walrath said no platform on the market, again including Google DoubleClick's DART and Microsoft's Atlas, provides this kind of comprehensive ad-serving experience with the inventory visibility, ease of use and speed that Yahoo's platform will provide.

Don't expect the platform to be everything to everyone out of the gate. While Walrath expects there will be a convergence between search and the other ad mediums such as display and mobile, Yahoo's Panama search ad platform won't be part of the new platform. The platform's development, he said, will be indefinitely iterative as the market evolves.

Indeed, the platform will be primarily focused on display ads at first. Walrath said he expects the platform to boost Yahoo's display ad business despite the looming threat of Google, which is revving its YouTube monetization efforts.

Yahoo easily leads the display ad market with what ComScore said is about a 20 percent share. Microsoft sits behind Yahoo with roughly a 6 or 7 percent share. Google, which makes its fortune in paid search advertising terms, holds only 1 percent or so, according to ComScore.

But Google has been making some advances in integrating DART with its content network and is fervently testing ways to make money from YouTube video display ads. Microsoft has no such property.

It's hard to say exactly what kind of impact Yahoo's new platform will have on any of its ad buckets; Yahoo is several months away from formally unveiling it. Will advertisers leave Google, Microsoft and other platforms for the new Yahoo platform? Walrath believes so.

Just as crucial a question is how the rest of Yahoo's turnaround plan will shape up.

Will Yahoo gain search share on the strength of its new open SearchMonkey and BOSS platforms? Will users appreciate the company opening Yahoo Mail up as a major social network? These questions need to be answered in 2009 and beyond.

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