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Yahoo's Advertising Reboot Still A Work In Progress

Jan 7 2014, 11:16pm CST | by


Yahoo announced some interesting products during CEO Marissa Mayer’s keynote speech at CES Tuesday in Las Vegas–a couple of digital magazines (food and tech), a news digest app, and a new smart TV guide, plus the acquisition of mobile home screen app Aviate, and for some added glitz, John Legend, Katie Couric, and a couple of Saturday Night Live stars.

Whew. But there was no mention of what’s ultimately the most important product for Yahoo–advertising–until more than 45 minutes into the hourlong event. So I was all set to write a post titled something like, “Why Were Ads Such An Afterthought At Yahoo’s Big CES Appearance?”

Then I had a chance to talk to two Yahoo advertising executives. What emerges to my mind after my conversation with Scott Burke, senior VP of advertising and data platforms, and Dennis Buchheim, VP of product management for display advertising, is that Yahoo’s attempt to return to relevance for advertisers remains a work in progress–but at least there appears to be progress.

Despite recent improvements in products and traffic, the company is continuing to suffer from falling sales of advertising, its chief revenue source. Not surprisingly, Mayer is expected to talk a lot about ads, specifically how Yahoo is going to get more of them. It has recently been emphasizing what it calls Stream Ads, which appear like Facebook’s news feed ads and Twitter’s promoted posts in the flow of the existing content on a page. But the results remain uncertain, at the very least until the company reports fourth-quarter earnings in late January.

Still, there’s clearly a lot happening behind the scenes. While details were scant at the CES event itself, Yahoo actually announced a number of significant developments on the ad side. The basics:

  • Tumblr Sponsored Posts are now run by the main Yahoo ad system, so advertisers can more easily personalize and target them to the right audiences.
  • Yahoo introduced Audience Ads, which it describes as a better way to target specific audiences with ads than the previous system, called Genome that came from the acquisition of Interclick several years ago, though it uses Genome’s capabilities.
  • Yahoo also introduced a new self-serve ad buying system called Ad Manager, including an Ad Manager Plus variant coming later this quarter for more sophisticated advertisers.
  • Finally, the company announced Yahoo Ad Exchange, a replacement/rebranding for Right Media, the exchange it bought years ago only to see Google’s DoubleClick ad exchange steal a march on it. It’s for other online publishers to sell space they don’t sell direct.

All this is now under the wrapper of Yahoo Advertising, with an intention to provide a more unified, simpler way for advertisers to spend on Yahoo. It’s hard to tell to what extent this move goes beyond a rebranding just yet. But at least there’s a clear intention to unify Yahoo’s ad products–several that came from acquisitions and retained their branding and technology platforms, making it more confusing and difficult to integrate for advertisers. “Yahoo is such a strong brand to consumers,” says Burke. “Now we’re trying to bring in all the assets in advertising and fold them into that core brand.”

Also, most of the announcements were aimed at direct marketers buying advertising by the click, rather than at big brands looking to influence people’s purchasing intentions down the road–the bit pot of gold that television and magazines still dominate. Burke said Yahoo is equally committed to brand advertising. But it’s no secret that Yahoo had fallen way behind on automated or so-called “programmatic” ad buying that’s used mainly by direct marketers, so it had to shore up that end of the business.

The most promising sign, according to Burke, is the success of Yahoo’s Stream Ads and Image Ads, which are so-called native ads that mesh into the content they’re alongside. Burke says these ads, which have the added benefit of running more seamlessly on mobile devices where about half of Yahoo’s 800 million monthly users access the service, are actually producing more revenue per thousand views than desktop ads. Although Burke wouldn’t provide numbers, he pointed (rather awkwardly, it must be said) to the example of Facebook, whose mobile ads have helped recharge the company’s revenue growth in the past year. All Burke would say about Yahoo is that “we’re seeing very strong growth in our new, innovative products like Stream Ads.”

For all that, Burke and Buchheim admit that they’re still waiting for the improvement in traffic on Yahoo, and the success of the new ads, to come home to roost on the revenue side. Neither would hazard a guess on when that might happen. But if it doesn’t start to become apparent sometime this year, investors will start to get pretty impatient.

Source: Forbes

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