• by Erik Sass  @eriksass1, February 26, 2008

PHOENIX -- Promising to "revolutionize" Internet advertising, Yahoo founder and CEO Jerry Yang and president Sue Decker coyly hinted at some capabilities of Yahoo's new "Advertiser-Publisher Exchange," or Apex, at the Interactive Advertising Bureau's Ecosystem 2.0 conference on Monday.

The follow-up to Project Panama is supposed to remove much of the "friction" from the ad process--one of big marketers' main complaints, according to Chris Vollmer, a vice president with Booz Allen Hamilton who also spoke to the IAB.

Overall, the picture looks good for Internet advertising, "notwithstanding the current concerns about the economy," Yang said. But he added that the industry must figure out how "continue to drive a better experience for our users, and a better experience for our advertisers."

On the user side, Yahoo will move to consolidate its position as a "starting point" for users on the Web. Sticking to general categories, Yang said it will also "open up" the its various divisions, including the Web portal, Yahoo Mail, and search to developers, allowing users to create new features and sub-services. He also promoted an "open platform for developers on the mobile side."

Finally, Yang promised more social features, predicting that "the social phenomenon is just beginning." In the long run, Yahoo hopes more openness will maintain a link with consumers as the Web grows ever more complex and fragmented.

On the advertiser side, Decker said Apex aims to move the logistics of ad creation, placement, and serving from advertisers' "internal I.T. systems" to the Web. She added that it will simplify placement "across all platforms," including "search, display, video, harnessing Yahoo and off-Yahoo" content, and mobile, with both auctioned and guaranteed inventory.

She also described a few Apex features. Noting that many Web publishers run out of their own premium inventory, Decker said Apex will allow publishers to also distribute an advertiser's campaign across a network of publishers with "similar audiences." For advertisers, it will "streamline the process" with a standard interface--eliminating the need, for example, to "enter the same campaign a half dozen times" for different publishers. For networks, it will "connect your publishers with a much broader array of advertisers."

During his interview of Yang and Decker, IAB President and CEO Randall Rothenberg noted that Apex could stir concern that Yahoo plans to cut publishers and agencies out of the business. However, Decker dismissed fears that it will commoditize publishers' content: "We see the exchange as a critical part of the broader platform for driving openness and scale. If we could decrease the friction in the process, that can only increase the yield for publishers," by attracting more ad dollars overall. As for networks, she conceded that "if they exist solely for arbitrage, then they're less important." But she noted that most networks "aggregate unique demand and unique supply. Our mission is to allow them to open up even more."

Pointing to Yahoo's newspaper consortium, which now has over 500 newspaper partners, Decker said that newspapers are "fundamentally trusted brands in their local communities--stronger than Yahoo, as a national brand." Yahoo simply hopes to "drive traffic to them by taking the best of the content and offering it to our audience," which in turn will help them tap local advertising."

Likewise, Apex won't pose a threat to agencies that provide special services including creative and strategic planning; rather, by taking care of tedious logistics it will simply free them up to focus more on these primary responsibilities, Decker argued.