Skip to main content

Two paths to targeted marketing - Google and Yahoo

Yahoo has been attempting to move toward what some advertisers regard as the ultimate manifestation of marketing: ads tailored to the individual. With the announcement of their SmartAds product, Yahoo is claiming that they can target narrower groups of individuals and target ads more directly to the characteristics of that group. By analyzing users past web behavior combined with what a user is currently doing, Yahoo says they can more accurately determine the kinds of ads that a particular group of users should see. Yahoo's new technology will then cobble together the appropriate pieces to present a complete banner ad tailored to that group.

Google has chosen to pursue a different path and has announced that they do not intend to pursue behavioral targeting. They have opted instead to refine their flagship technology around search ads. The enhancement they are currently testing includes the previous search terms as well as the current search terms to determine what ads to show to users. This approach requires no knowledge of the user's past behavior on the web and uses only the user's current session. The benefit of this new approach is based on the contention that a user will do several searches to research a subject area. By addressing ads to the "theme" the user is searching on it is anticipated that the ads will be more relevant for that user.

Google has been working hard to maintain a consumer-friendly posture. This approach to ad targeting is being touted as preserving user privacy and to a great extent, it does. Clearly, it does much more to maintain user privacy than the recently announced policy of setting cookies to expire. (The cookie announcement has been criticized in the blogosphere as not really accomplishing much.)

Why the two approaches to targeted marketing?

Each company is playing to its strengths. Google is undisputedly the dominant search engine. That has created a powerful revenue stream from search-related advertising. Continuously refining the technology behind search ads is a logical progression. Using the lessons learned in search advertising probably allows tuning of the AdSense process whereby ads are served based on the content of the pages where they are hosted.

Yahoo's strength is content; as opposed to Google, Yahoo has more traffic that comes for the content as opposed to search. Building a new strategy around configurable banner advertising makes more sense than trying to beat Google in search advertising. Because there is more variety of content around which to place ads, Yahoo can benefit from the new style of behavioral targeting as well as the old style of behavioral targeting where ads were placed on sites that expected traffic from users with specific interests (placing car ads on sites for car enthusiasts, for example). Meanwhile, the Panama technology for search advertising that Yahoo recently rolled out at least keeps them in the game though not on a par with Google.

With all these different methods of serving ads and all the visitors that they get, why can't Yahoo be more profitable?

With search ads, and by extension AdSense (both can be considered contextual advertising), Google just sticks to core functionality and grows market share and earnings.

Where would you put your money?

Disclosure: I have no positions in either Google or Yahoo

Comments

Popular posts from this blog

Time to be conservative with your 401K

Most of the posts I and other financial bloggers write are typically focused on individual stocks or ETFs and managing active portfolios. For those folks who are more conservative investors, those whose main investment vehicle is a 401K, for example, the techniques for portfolio management might be a little different. The news of stock markets falling and pundits predicting recession is disconcerting to professional investors as well as to those of us who are watching our balances in an IRA or 401K sag. What approach should the average 401K investor take? Let's assume that the investor is contributing on a regular basis to one of these retirement accounts. There are two questions that the investor needs to ask: 1. Should I stop putting the regular contribution into stocks? My feeling is that investors making regular contributions are being handed a present by the markets. Every week the market goes down, these investors are lowering their average cost. When markets reco...

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas. Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what...

Trade Radar gets another update

Some of our data sources changed again and it impacted our ability to load fundamental/financial data. In response, we are rolling out a new version of the software: 7.1.24 The data sourcing issues are fixed and some dead links in the Chart menu were removed. So whether you are a registered user or someone engaged in the free trial, head over to our update page and download the latest version. The update page is here:   https://tradingstockalerts.com/software/downloadpatch Contact us if you have questions or identify any new issues.