Yahoo Unleashes Display Initiatives, Strikes Deals With Havas, Wal-Mart, Newspapers

Sue Decker of YahooYahoo kicked off the Advertising 2.0 conference in New York Wednesday with a flurry of announcements highlighting the company's renewed focus on display advertising even as it faces a shareholder-led proxy fight following Microsoft's failed takeover attempt.

The new ad-related initiatives unveiled by Yahoo include:

* An exclusive, multi-year agreement with Wal-Mart to handle display and video advertising on the retail giant's Web site. Under the deal, Yahoo will power ad pricing, targeting, delivery and reporting for Walmart.com.

* An agreement with Havas Digital, similar to a recent partnership with WPP Group, under which the agency will create its own proprietary media-trading platform that links to Yahoo's Right Media Exchange for buying and selling remnant Web inventory. Havas will also be an early adopter of Yahoo's AMP display ad management system to be launched in the coming months.

* A program to create online circulars combining Yahoo Smart Ads technology with content from marketing services company ShopLocal to produce localized promotional offers similar to those found in Sunday newspapers. The Yahoo Circular Program is intended to give retailers the ability to deliver offers during the rest of the week to its U.S. audience of 140 million. Target is one of the first customers.

* The addition of 94 U.S. newspapers to Yahoo's Newspaper Consortium including the Chicago Sun-Times, the Milwaukee Journal Sentinel, the Akron Beacon Journal and the Honolulu Star-Bulletin. With a total of 779 newspapers, the consortium launched in 2006 comprises 200 companies and represents nearly one-third of Sunday circulation.

* Yahoo has joined the CBS Audience Network, which aggregates video from more than 300 sites and media companies including AOL, MSN, YouTube, NBC and Fox.

Together, the moves are intended to position Yahoo for what President Sue Decker told conference attendees was a coming "renaissance in display advertising" on the Web.

While display advertising represents 90% of all inventory, she said its potential has yet to be fully exploited online in the same way as search advertising. Yahoo's answer is its AMP platform, which promises to streamline the process of buying and selling display ads across digital formats by serving as a one-stop-shop for agencies, advertisers and publishers.

Newspapers in the Yahoo consortium will be the first to use the AMP system when it's rolled out in the late third quarter or early fourth quarter. Agencies and advertisers are expected to follow later in 2008 and 2009.

In connection with the Wal-Mart deal, Decker said advertisers can now reach 76% of the online retail audience through Yahoo when combining Walmart.com inventory with that from the portal's existing ad-selling partnership with eBay and space on Yahoo Shopping.

"[Wal-Mart] believes, and we believe, that we can produce a bigger business together than separately," she said. "What we've learned is the more closed the approach, the smaller the opportunity."

The news follows closely on the heels of Walmart.com launching a free classified service to compete with Craigslist and other free listings sites.

During a Q&A session, Decker explained that Yahoo focused initially on upgrading its search advertising technology via Project Panama because "we felt we had to get search functions up to industry competitiveness." (That is, more competitive with Google.)

She remained tight-lipped about any potential deal to outsource paid search advertising to Google following a two-week test the companies ran in April in the midst of Microsoft's hostile acquisition attempt. But with Panama up and running, Decker emphasized that Yahoo was focused on tackling the more daunting challenge of simplifying display ad placement.

"The fragmentation of inventory is a key problem," she said. By contrast, "through Google and Yahoo you can reach 80% of search inventory. You don't have to go to different parties to cobble together a campaign."

She added that Yahoo ultimately aims to double its share of online display ad demand to 30% through partnerships with premium publishers. In terms of creating opportunities for brand advertisers, Decker pointed to steps Yahoo has taken to boost video inventory on the site, including its acquisition of Maven Networks earlier this year.

"It's hard to buy video today. If we can aggregate more demand with CNet, CBS, there are more opportunities for advertisers," she said. "Maven offers a way to surface the very best content on the Web."

Decker also discussed a range of social media properties within Yahoo such as Yahoo Answers and Yahoo Buzz as opportunities for major brands to pursue social marketing and target specific audiences within the site.

And through its effort to open up its many services to allow outside developers to create applications around them, the company intends for people to interact with Yahoo more like a social network. "There are ways to reach consumers and engage with them to build brands in ways we've never seen before," said Decker.

While the Yahoo president would not elaborate on the epic takeover battle with Microsoft, she said talks are ongoing with the software giant about possible "strategic partnerships." Because Microsoft never reached Yahoo's price threshold for a deal, other substantive issues concerning a possible merger were never discussed, she added.

During a luncheon with reporters following Yahoo's announcements, Decker also said neither the Microsoft bid or the looming proxy battle led by shareholder activist Carl Icahn had delayed any of its strategic initiatives.

"I don't think it's affected our road map at all," she said, noting that none of its initiatives in recent months had been delayed by the corporate controversies.

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