Yahoo believes it's poised to revolutionize online advertising after years of being outmaneuvered by rival Google. But the slumping Internet...
SAN FRANCISCO — Yahoo believes it’s poised to revolutionize online advertising after years of being outmaneuvered by rival Google.
But the slumping Internet pioneer might not get the chance to show off the latest improvements to its online-ad platform if it can’t convince impatient investors that its approach will have a bigger payoff than Microsoft’s unsolicited offer to buy the company for more than $40 billion.
Hoping to gain wiggle room, Yahoo is releasing more details about its effort to become a one-stop shop for selling and distributing online display ads, the Internet’s equivalent of billboards.
The upgrade, “Amp,” won’t be available until this summer, and then only on a limited basis among more than 600 newspaper publishers trying to recover some of the revenue the Internet has siphoned from their print editions.
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Nevertheless, Yahoo will begin promoting Amp today with an online video demonstration of a system the company promises will make it easier for advertisers to target their messages at specific groups across scores of Web sites.
Amp will rely heavily on data Yahoo collects about people’s preferences at its own Web site as well as other online destinations.
The practice, 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 interests.
Yahoo has begun showing the system to publishers in its newspaper consortium. Those newspapers are slated to become the first users of Amp.
“Yahoo clearly has put a full-court press on developing this platform,” said George Irish, president of Hearst Newspapers, which owns 12 dailies, including the Seattle Post-Intelligencer, that are part of the Yahoo consortium.
“I think it’s going to be very important for us,” said William Dean Singleton, chief executive of MediaNews Group, which operates 57 daily newspapers in 12 states. “Giving us the ability to sell targeted online advertising will allow us, I think, to charge more for advertising online.”
With Amp, a newspaper sales representative working with a car dealer, for example, would be able to easily see the ad space available on not only the newspaper’s site but also Yahoo and other Web publishers’ sites.
The salesperson could slice that inventory by demographic profile to, for instance, aim ads for a new hybrid SUV to females of a specific income and age group.
Yahoo’s new platform will be competing against similar technology recently acquired by Google and Microsoft.
Google bought DoubleClick for $3.2 billion primarily so it would have a better vehicle for selling display ads. The same objective drove Microsoft’s $6 billion purchase of Seattle-based aQuantive.
Amp didn’t cost Yahoo nearly as much. Besides relying on engineering developed by Yahoo employees, Amp draws on technology Yahoo picked up by buying online ad service Right Media and Blue Lithium last year for a total $781 million.
Selling advertisers on Amp may prove easier than convincing Yahoo shareholders that the new platform is a better bet than selling to Microsoft, whose unsolicited takeover offer was initially valued at $44.6 billion. Yahoo maintains its franchise is worth a lot more, partly because of promising advertising ideas like Amp.
But investors have reason to doubt Yahoo’s judgment after two years of disappointing results. “They have a little bit of a credibility problem right now,” Jupiter Research analyst David Card said.
In a sign of the skepticism dogging Yahoo, Wall Street hasn’t embraced the bullish outlook the company released last month to illustrate why its board rebuffed Microsoft’s bid.
Yahoo projected its 2009 revenue would total $7.1 billion, up 25 percent from this year. It expects its 2010 revenue to climb 25 percent more to $8.8 billion.
Analysts have much lower expectations, with their average revenue estimates standing at $6.4 billion for 2009 and $7.4 billion for 2010.
Material from The New York Times was included in this report.