Yesterday Yahoo announced that they are acquiring the 5th largest ad network BlueLithium and of course a lot of the press are digging in deep about what this means for their behavioral targeting ad buys. Reuters reported that Yahoo buys behavioral ad firm for $300 million and then one of my favorite news/bloggers Kara Swisher reported Day 50: Yahoo takes a $300 million little blue pill that could make consumers even more paranoid. Reuters wrote in that article, "bolsters Yahoo's existing behavioral ad-targeting efforts with its 250 million-strong base of Yahoo Mail users and Yahoo Travel, an analyst said. And, "This really gives us the ability to (deliver) more relevant advertising to consumers not only on the Yahoo network but also off the network," Todd Teresi, senior vice president of the Yahoo Publisher Network, said in a phone interview."
Me? Sure the behavioral targeting will happen, but I've always believed Yahoo knows more about your web surfing behavioral than anyone and that includes Google (maybe that won't be the case going forward, but hold that thought). Yahoo has been tracking your web surfing behavioral for as long as I've been working with them (1998) and I've used them to build responder and cloning models. They really don't need anyone's help with modeling and targeting, but they do need help with more traffic. Allow me to explain what I mean by that using Google as the example.
The reason Google may have better behavioral targeting in the future (ignoring whether they are hiring smarter people which I have no insider information on) is because the majority of searches occur on Google. They then provide you with all sorts of free goodies like Gmail, spreadsheets, homepage, YouTube, gadgets, maps, etc and etc so that you spend more time on their products allowing them to mine your data. So, what does Google do with that data? Well besides potentially giving you more personalized search, they use your behavioral data to improve their targeting of ads while you are surfing on their content network. You get it right? Tons of traffic, more of your valuable time, translates into better data on your behavior and that allows Google to target better ads. Now, lets look at Google's content network.
Back in the day, I wouldn't have turned content on in fact I would have stressed to you to turn it off. That's where I found click fraud data, lower conversions, and unless you used a bid manager you had no visibility where those clicks were coming from. Not any more. Google has added a lot of tools and visibility so that content can work and that means Yahoo has a problem.
Yahoo's model in the past has been search ads as well display ads on Yahoo's properties; sure Yahoo has a text ad content business but with no visibility. Google has now moved to be the largest search ad channel bundled with huge reach (80%?) on their content network. And, as opposed to Yahoo's current model the rates can be as low as your CPC or CPA rate you want to pay. Yahoo's display model is based on CPMs and on their properties, only.
That's is until the BlueLithium purchase. Now Yahoo can start to compete more with Google on the content side of the business and if you add in their past purchase of RightMedia you can see the pieces of the puzzle being put together. It isn't about getting better at behavioral targeting, it is about extending Yahoo's reach beyond their core properties.
If I had to make a bet, I'd think that Yahoo isn't done yet with buying more networks. I think they can out maneuver Google by getting even bigger on the display side of the business and that more than makes up for their shortfall on search traffic. Yahoo needs to get even bigger now...
PardonMyFrench,
Eric