Yahoo launches customizable ad tool

SmartAds system lets marketers offer ads that are tailored to the Web surfer's age, gender, location and online activities.

Yahoo just upped the ante in the display advertising space.

On Monday the Web giant launched a new display advertising product called SmartAds, which allows marketers to offer ads that are customized according to the Web surfer's age, gender, location and online activities.

For instance, instead of just seeing a generic ad for a Toyota Prius, a woman in San Francisco who conducts research on hybrid cars on Yahoo Autos could be served an ad for a local San Francisco dealer, along with information on the types of Priuses in stock and their purchase price. The ad, which is configured on the fly, could also feature a background color targeted for women in her age range, as well as a Golden Gate Bridge logo.

Someone searching for flights between Dallas and Phoenix, meanwhile, could be served an ad with specific up-to-the-minute fares from a particular airline, along with a button that says "buy now," all within the ad, said Yahoo spokeswoman Gaude Paez.

"We do behavioral targeting now," she said. "This makes display (advertising) more of a direct-response vehicle than just branding."

Yahoo SmartAds combines Yahoo's demographic, geographic and behavioral-targeting capabilities with a new patent-pending creative ad assembly platform that allows the company's ad system to create customized ads in real time. Yahoo will get different backgrounds, logos and other features from the creative agencies that can be reconfigured with ad copy based on who is seeing the ad and what they are interested in.

The company is launching ads with two major airline companies as well as some travel aggregators, none of which wanted to be identified, Paez said.

The ads will appear on Yahoo's network of owned and operated sites and eventually will be expanded to the newspapers Yahoo has partnered with, as well as Yahoo partners Comcast and eBay. Once Yahoo's purchase of online ad provider Right Media is completed, the companies will work to display the SmartAds on sites on Right Media's advertising network. Yahoo has agreed to pay $680 million for Right Media.

The move gives Yahoo, already the leader in online display advertising, an added edge over competitors and could eventually help offset slowing growth in display advertising. Executives warned recently that second-quarter results would come in at the low end of guidance.

Yahoo is in transition, struggling to reverse a slowdown in revenue growth and a stock price slide after losing the search and search advertising race with Google. Chief Executive Terry Semel stepped down in mid-June and passed the baton to co-founder Jerry Yang, shortly after getting blasted by shareholders at the annual stockholder meeting.

Yahoo's rivals aren't sitting still when it comes to display advertising. Google is buying online ad company DoubleClick for $3.1 billion, and Microsoft has agreed to pay $6 billion for Aquantive.

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