July 2nd, 2007

Yahoo SmartAds Tackles Online Display Advertising’s Customization Problem

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Yahoo has launched an advertising platform called SmartAds, which allows display ads to be customized “on the fly” based on a user’s behavioral profile, taking a significant step towards the long-promised but thus far poorly-delivered paradigm of total customization for online display ads.

The product, Yahoo SmartAds, would help marketers create custom advertisements on the fly, using information on individual buyers and information on real prices and availability from the vendors. For example, a person who had recently searched for information about blenders might see an ad from Target that gives the prices for the blenders that are on the shelves in the store closest to that person’s home.

Search advertising, i.e. keyword driven ad delivery, has shown how much better targeted, highly relevant ads perform, at least as measured by click. But even search advertising is a one-size-fits-all proposition — everyone who types in a particular keyword sees the same ads.

The challenge for ad customization is infinite complexity and the resources required to deal with that complexity, which is a slippery slope — the more data is available about a user, the more an ad can, in theory, be customized. At the extreme, each individual would see different creative and a different message, perfectly tailored to their consumer psyche. But there are no ad agencies prepared to handle such complexity.

Yahoo’s solution is smart because they aren’t trying to tackle the full complexity. They are customizing the ads based on a product database and templatized creative, which makes creating a customized ad “on the fly” a viable scenario.

In fact, such template-based customized ads are already used in search advertising — for example, compare the Circuity City ad that appears on a search for “hp photo printer” vs. the one that appears for “canon photo printer”:

Google HP Photo Printer

Google Canon Photo Printer

Circuit City advertises “HP Printers & Accessories” vs. “Canon Printers & More” — it’s customized, but it doesn’t address the fact that I’m looking for a photo printer, and it doesn’t show any products or product-specific pricing in the ad — and a text ad doesn’t really have room for such information. But a display ad does.

The ad also doesn’t take into account other pages I’ve visited in doing my research on printers, which might give more clues as to what I’m shopping for, e.g. have I been checking out reviews for high-priced printers or low-priced printers?

Still, it’s easy to customize a text ad — customizing a display ad could lead down a path of infinite complexity, which has been a huge barrier to implementing customization. But Yahoo solves this problem by using the template approach.

It’s notable that SmartAds is about more than just customization — it’s about navigating the “fuzzy middle between branding and direct response ads,” by building direct response product information into a branding ad. Yahoo is smart to trumpet this in their press release title: Yahoo!’s New “SmartAds” Meld Brand and Direct Response Advertising. There my be even more to gain from bridging the branding/direct response divide (which maps to the display/search ad divide) than from solving the customization problem — or perhaps it’s one and the same.

Given all the data that cookie tracking makes available for behavioral targeting and all of the product data easily available online, it’s a wonder that no one has created such a customized, branding/direct response ad platform before — even more of a surprise that Yahoo beat Google to the punch.

Good for Yahoo — and good for advertisers, who finally have a way to make their display ads more relevant — and more direct response oriented — without an expensive increase in ad agency resources, and good for consumers, who might actually start experiencing the kind of relevancy in display ads that they have enjoyed in search text ads.

  • Rexford

    Qmecom, good idea but looks like latency could be a huge issue for an in page ad application. It takes significant time to load, and you dont really know what is coming.

    SmartAds is crisp. It dynamically combines a display ad that allows for branding opportunity, with textual search data. It does this without any noticable time difference.

    The Qmecom looks like a good application for content on demand. This is content that the user is willing to wait for that has advertisements inserted. Just my opinion.

  • Smartads is Yahoo's attempt to leverage the depth of their online profiles with a more flexible creative solution. But does it really solve the big problem for the creators of advertising - how do we create mass personalized ads with a tool that is easy to use and integrates easily into our workflow. Can you really see the Guardians of the worlds leading brands accepting restrictions on their creative executions dictated by Yahoo's Smartad program? They will want total customization flexibility, across any creative element and across any medium. The folks at Qmecom have perfected this application and make it easy for agencies to create literally millions of unique versions of ads. Smartads might be Yahoo's solution today, but tomorrows solution will be Smarter Ads - and my guess it will be one of Yahoos competitors who will launch it very soon!

  • Rexford

    Patent number: 7028072
    Filing date: Jul 14, 2000
    Issue date: Apr 11, 2006
    Inventors: Scott A. Kliger, Thomas M. Middleton, III, Gregory T. White
    Assignee: Unicast Communications Corporation

    A method and apparatus providing for the construction of customized advertisement banners for Web pages on a client computer. The advertisement banners are customized based upon various factors including user profile information, technographic information, geographic information, demographic information and user interaction information. The information being either stored on the user's computer, server computers or obtained from the user's interaction with the Web page containing the advertisement banner. Once specific information is obtained, customized advertisement content is selected from Web server computers and the advertisement banner is dynamically constructed and displayed on the user's computer.

    http://patft.uspto.gov/netacgi......

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