• The Wall Street Journal, Thursday, August 16, 2007 11 AM

It's no secret that Yahoo's flagging display business could use a shot in the arm, and SmartAds, introduced a month ago, could be the ticket. The tactic, introduced a month ago, offers advertisers a combination of personalized and behaviorally targeted ads. Because finely targeted ads command a higher premium from advertisers, the new format could be a boon for Yahoo. But the the tactic could be an even greater success for the company's other display ventures, the newly acquired ad exchange Right Media, and its partnership sites like eBay.

David Karnstedt, Yahoo's head of North American ad sales, confirmed the expansion plan. "We will extend [SmartAads] everywhere we can," he said. But can SmartAds really turn around the company's fortunes? Marketers said they were excited about the program's capabilities but, as with any targeting technology, targeting comes at the expense of reach. Advertisers want both, which is why analysts are skeptical of SmartAds; Yahoo will have to deploy the program en masse. Behavior targeting also raises privacy concerns.

Yahoo's display business was once its strength, but with paltry growth (for the Web industry, anyway) of 13 percent in the second quarter, investors aren't seeing the light--especially when rivals like Google, Microsoft and social networks continue to move into Yahoo's territory. The company's stock has sold-off 31 percent since a 52-week high in early May.

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