San Francisco — The latest punch thrown in Yahoo!’s fight to stay relevant and avoid a take over by Microsoft is beginning to pull the wraps off an online advertising system that the company said would help it and its partners drive sales of graphical and other premium ads.
Yahoo Inc. is releasing more-detailed plans for an online-ad system, named AMP, aimed at increasing revenue from graphical display advertising, such as banner ads, which is expected to become available in the third quarter of 2008 for newspapers participating with Yahoo in an online ad consortium.
The widely anticipated system, greatly intends to simplify the process of buying and selling online ads, allowing Yahoo’s publishing partners, for instance, to place ads on their own sites as well as on Yahoo and on the sites of other publishers in the company’s growing network. Advertisers will be able to focus those ads by demographic profile, geography and online behavior, the company said.
The announcement Monday comes about a month following rival Google’s purchase of ad sales management firm DoubleClick for US$3.1 billion completed and almost a year later than Microsoft acquired Seattle-based ad network aQuantive for about $6 billion, as Yahoo attempts to focus its activities and seeks alternatives to an unsolicited takeover bid by Microsoft Corp.
But that is just the early stage. Yahoo says it “plans to expand the functionality of the system as well as participation to more publishers, advertisers, agencies, and ad networks through the rest of 2008 and into 2009.”
“This is a ground-breaking move that will allow marketers and publishers to deliver a more compelling experience for consumers,” said Hilary Schneider, Yahoo’s executive vice president of global partner solutions.
Those comments recall similar statement that Yahoo’s top two executives, Jerry Yang and Sue Decker, made at an online advertising conference in late February. At that time, the new system was still operating under the code name “Apex,” short hand for Advertiser Publisher Exchange.
Yahoo executives said they anticipate rolling out AMP in the third quarter for use by newspaper companies that are part of an existing Yahoo ad-sales consortium, and eventually extend it to additional Web publishers, advertisers, agencies and online-ad networks. The company stated that the system, at a later stage, will handle ad types besides display, such as search, mobile and video.
“That is huge in terms of reducing friction in the marketplace,” said Rachel Happe, a research manager at IDC in Framingham, Mass., who was briefed by Yahoo on its plans. “If Microsoft buys Yahoo, they would be foolish to dismantle this,” she added.
Amp extensively relies on data that Yahoo collects about people’s preferences at its own Web site as well as other online destinations. The concept, known as “behavioral targeting,” has raised privacy concerns, but Yahoo — like rivals using similar tracking technology — believes consumers will appreciate seeing more ads tailored to their individual interests.
Some analysts and investors have been cynical of Yahoo’s ability to deliver AMP — previously called Project Apex — on time. Yahoo has put great efforts to deliver a major advertising-technology system called Project Panama that since its delivery has improved the amount of ad revenue Yahoo generates for each Web search.
“It is a much bigger undertaking than Panama was,” said Michael Walrath, a Yahoo senior vice president. But he said Yahoo was “very confident” it would meet its expected deadline.
Although the plan of action remains in its early stages, AMP is one of the products which Yahoo management considers will help push the Web pioneer’s next wave of growth.
“This is in fact about creating a very large networked advertising ecosystem,” Walrath said in an interview. Walrath founded Right Media, an ad sales exchange, in 2003 and sold it to Yahoo last year.
The system, which was created with a mixture of technologies developed at Yahoo and besides relying on its own engineers, Amp draws on technology that Yahoo obtained when it bought Right Media, BlueLithium and other companies last year for a total of $781 million, will also serve ads directly to publishers’ sites and allow marketers to monitor their performance.
It is also one of the factors behind Yahoo’s unwillingness to accept Microsoft Corp.’s unsolicited takeover bid currently valued at $42.4 billion, which executives believe undervalues the company’s assets.
On Saturday, Microsoft, in an open letter said that if a deal was not reached by April 26, it would launch a hostile takeover at a less attractive price. If Microsoft follows that alternative, Yahoo’s annual shareholders meeting will be the most likely forum for the showdown. Yahoo must hold the meeting by July 12, right around the time Amp is supposed to debut.
Nevertheless, Yahoo would start promoting Amp on Monday with an online video demonstration of a system that the Sunnyvale-based company assures will make it easier for advertisers to aim their messages at specific demographic groups across scores of Web sites.