Did Yahoo Miss A "Fundamental Change" In The Ad Business?

Cave Man

Photo: rizzato

During its Q2 earnings call, Yahoo said the reason it turned in disappointing US display advertising numbers was that its sales force is going through a re-org, and that due to “turnover,” coverage was light.But in the New York Times, Randall Stross posits a different theory: Yahoo sells a type of ads advertisers don’t want to buy anymore. He says there has been “a fundamental change in the way display advertising is being bought and sold” and that it “is hurting Yahoo’s core business.”

Stross: “Today, advertisers care less about creating a partnership with a particular Web site and more about the behavioural characteristics — as best as they can be known — of their target users, wherever they happen to be. More and more ads are placed through online ad exchanges, in which ad agencies buy from whoever offers the lowest price for users who meet the buyer’s criteria.”

This thought is similar to the one we published by an ex-Yahoo sales guy a couple weeks back, who said “[Yahoo CEO Carol Bartz] failed to recognise the importance of technology to target advertising to consumers, and today, Yahoo is by far and a way, at the bottom of the pack in terms of targeting. “

After we published that story, Yahoo immediately contacted us with this rebuttal:

  • “[Yahoo-owned] Right Media is the leading global advertising exchange with more than 300,000 active global buyers and sellers and 11 billion daily impressions.”
  • “Hadoop is the platform for Yahoo!’s next generation display advertising system, optimising forecasting and pricing for billions of ad serves daily. Since the project started five years ago, Yahoo! has contributed over 70 per cent of the code, turning the project into a world-class platform.”
  • “Yahoo!’s advertising system matches ads with relevant articles to improve targeting. It can retrieve data as recent as 1 hour to as far back as 6 months and can index a billion ads in a few hours.”
  • “Yahoo! offers 400+ behavioural targets, based on PC and mobile data, that enable advertisers to find users when they are browsing for specific products or are ready to buy. “

Frankly, Yahoo’s been talking about and putting resources into behavoiral and demographic targeting longer than anybody in the space. So unless they’ve been blowing smoke up everyone’s behind for years and years – a possibility! – we tend to believe the company’s bad-enough-news-as-it-is explanation for the poor Q2: a disorganized sales force.

But maybe we’re wrong!

Is it true that brand advertisers would rather just buy a trough of cheap, targeted inventory instead of spending more to create customised campaigns? Let us know in the poll below.

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