Yahoo AdLabs, the unit which was established with a similar mission back in 2005, aims to assist advertisers yield more out of their marketing dollars by combining research and data mining with watching how users interact with ads.
“Yahoo! Labs has been instrumental in devising Yahoo’s advertising products, laying a foundation of scientific research and innovative data analysis, supporting everything from the world’s most advanced display advertising marketplace to the world’s most effective ad targeting capabilities,” said Dr. Prabhakar Raghavan, Yahoo’s chief scientist and head of Yahoo Labs. “AdLabs will … break new ground in combining scientific rigor with a deep understanding of the practical needs of marketers.”
So far, Yahoo Labs has produced studies on online advertising, and claims to have created the new scientific discipline of “Computational Advertising” and offered various insights into consumer behavior and ad metrics.
New research from Yahoo AdLabs, which collects data designed to show the potentiality of targeting consumers based on their proximity to a marketer (“Hyperlocal targeting of a retail display campaign produced more than five times return-on-ad-spend, measured by sales lift at the retailer,” was one example of the pitch). Overall, 75% of the total return in this phase of a new study was generated by in-store purchases.
“The AdLabs team will mine Yahoo!’s vast data repository of campaigns and associated statistics to inform both thought leadership and product innovation,” a representative for the company said in a statement. “The team will also work directly with key advertising and data partners in a prospective way to test of the insights uncovered.”
The study was carried out at an “exceptional scale,” involving 300 million Yahoo users, according to Raghavan. It revealed, among other things, that hyperlocal ads give a five-fold return on ad-spend when measured in sales at the local store.
“It is not just intuition, we can quantifiably measure these things,” Raghavan said.
Furthermore, the group has been working unobtrusively within Yahoo Labs for about six months. Besides, it operates with a rather modest staff today but is looking to hire more “top talent,” said Ken Mallon, the Yahoo vice president in charge of AdLabs. He declined to disclose the group’s budget.
“Successful campaigns change perceptions about brands and increase sales,” said Mallon. “Marketers need new, breakthrough, scientifically-tested procedures to drive these important metrics. Yahoo! has the calibration to measure the impact of many campaigns and the breadth of expertise to produce the new models and innovations that will move the digital advertising industry forward.”
Since the past year, AOL has bolstered its Patch local network–it now covers 775 areas, but still does not appear to be producing much revenue yet–and local news aggregator Outside.in has partnered with several media companies, including CNN, who want to enter the local ad marketplace quickly.
Yahoo has also endorsed a number of partnerships with companies such as Gannett and direct marketer Valassis, that are meant to broaden its local reach.