Jul. 2, 2007 at 10:41am Eastern by Greg Sterling

New SmartAds: The Future Of Graphical Advertising At Yahoo

Yahoo is introducing new SmartAds that deliver display ads to people across the web based on their demographic and geographic profiles, plus search and web browsing behaviors. These ads represent the future of graphical advertising at Yahoo, according to Gaude Lydia Paez, director of corporate communications at Yahoo.

SmartAds have been successfully tested over the past four to five months in the travel category, and they will eventually roll out across the larger Yahoo network and ultimately on RightMedia and other partner sites.

While SmartAds won't replace pure branding in all circumstances, they will provide brand and display advertisers with the option to target audiences based on demographic, geographic or behavioral profiles – or a mix of all three.

Yahoo has been offering these various flavors of targeting, including behavioral targeting, for some time. The really new thing about SmartAds is the "creative assembly platform," for which Yahoo has applied for a patent. The idea, according to Paez, is to take "templates" of advertiser-generated creative (e.g., copy, logos, graphics) and assemble those elements dynamically depending on the targeting opportunity. An 18-year-old woman in New England looking for hybrid vehicles, for example, might see a different ad from the same marketer than a 50-year-old male in Texas.

Yahoo can also take offers or inventory feeds and present "the right offer at the right time" via SmartAds, Paez said. Accordingly, it can make graphical advertising and branding perform much more like direct response and search. It offers something of a cure for so-called "banner blindness." (See, for example, "Marketers Seek a Banner-Blindness Cure," from the Wall Street Journal).

When questioned about how personal this ad platform could get, Paez was careful to stress Yahoo's privacy policy and explain that users are grouped into categories and subcategories but not individually targeted. A range of behaviors, including search queries, are factored into the determination of what ads are served to what users.

As a practical matter, Paez also emphasized, marketers want large audience segments and if those audiences are "too thinly sliced," they're not going to be interested. But SmartAds effectively allows brand marketers to target the head and the tail more efficiently. Paez added that Yahoo hoped direct response marketers would also be attracted to the new offering because of combination of branding and direct response elements.

Microsoft currently offers geographic, demographic and behavioral targeting, but the "creative assembly platform" component of Yahoo SmartAds is unique. Google offers various targeting options, though not behavioral targeting currently. However, through search personalization and other efforts, it can reasonably be expected that Google will eventually introduce some form of behavioral targeting.