The Yahoo! Heard ‘Round Madison Ave.

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Yahoo will announce new tools for online advertising today that could pull the company ahead in the race for what is called “behavioral targeting,” that is, the ability to better tailor online advertisements to the people most likely to buy.

The product, Yahoo SmartAds, would help marketers create custom advertisements on the fly, using information on individual buyers and information on real prices and availability from the vendors. For example, a person who had recently searched for information about blenders might see an ad from Target that gives the prices for the blenders that are on the shelves in the store closest to that person’s home.

The Internet has long promised this kind of one-to-one marketing, but it has often been difficult for advertisers to customize display advertisements with a broad reach.

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I have followed and worked with Yahoo and Google’s advertising model for a while. Although it is quite hard these days to find fault with Google, there are key issues that have yet to be resolved with its AdWords program. The largest issue is that any publisher using AdWords will see ads on its site that routinely feature its direct competitors because Google places ads based on the relevancy of ad content with sites’ content. A publisher can ban direct competitors by imputing their URLs into Google’s account management– However, to categorically ban all competitors would result in few ads left to appear on the site. In addition, publishers can’t actually view, approve and/or ban ads before they are published on a site. This means publishers must show all ads, find URLs manually when they appear and then ban later after a host of web users have already seen the ad published on its site. How can such an advanced company have such big holes in an integral part of its business?


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