Yahoo is introducing a new type of search advertising that integrates images and video in paid listings, the company plans to announce Thursday.
Search advertising typically shows only text advertisements and links. Marketers usually devote part of their online budget to search--which shows text-only advertisements and links--and part to display, the banner and box advertisements that show images or video.
By introducing video and images, the new offering from Yahoo, called Rich Ads in Search, gives search some of the advantages of banner advertisements. "It moves the advertising experience from just the blue links, to a more engaging experience for advertisers," said Tim Mayer, the vice president for search monetization and distribution at Yahoo.
Yahoo has been trying to win back paid search advertising from the market leader, Google. Yahoo's market share in paid search has fallen from 13.8 percent in 2004, to 10.5 percent this year, according to the research firm eMarketer. In the same time period, Google's market share has more than doubled, from 32.8 percent in 2004, to 67.7 percent this year.
Yahoo's strength has been its display advertising, where it sells boxes and banners on its highly trafficked pages. However, as the recession has deepened, many advertisers have shifted money to search, which gives them direct, measurable results.
Yahoo's fourth-quarter results, reported in January, reflected that change. Search revenue was up 11 percent, and display revenue was down 2 percent.
Yahoo has been testing its offering with advertisers like the dog-food company Pedigree. A search for "Pedigree" on Yahoo turns up a light-blue box at the top of the search-results page holding an image from a Pedigree commercial, which plays when clicked.
"Video is always more powerful than just words on the page," said John Anton, the marketing director at Pedigree. "It's definitely compelling to us to have options like this, where, when you type in 'Pedigree,' you get more than just the words, you get the video itself."
Yahoo can also include images--a search for Staples results in a similar light-blue box with the company's logo on the side. Or, it can include a search box within the light-blue space, asking the visitor to enter his ZIP code, then taking him to the section of the advertiser's Web site that lists bank branches or car dealerships near him, for example.
"What the search results look like is a very different experience with rich ads in search versus the text link," said Joanne Bradford, Yahoo's senior vice president for revenue and market development in the United States. "There is consistency to the experience, which all advertisers want, and were unable to get until this point."
Yahoo is charging a monthly fee for the service, versus the auction-based pricing of search advertising, which Mayer said Yahoo might use in the future. For now, it is allowing only certain large, brand-focused advertisers--which have existing commercials or logos--to participate in the program. SoBe, Pepsi and Home Depot were all part of the pilot program.
According to Yahoo, some advertisers in the pilot program saw an improvement by as much as 25 percent in click-through rates. Karin Blake, the senior search manager at the ad agency Razorfish, who tested the offering for some of her clients, saw slightly less significant results: she said her clients had a 5 to 10 percent increase in click-through rates compared with a regular text ad.
Still, the new type of search will probably be attractive to advertisers, who pay high prices to develop their commercials and logos, and want to be able to show those wherever they can.
"In a typical search landscape, you can't utilize things like video and images, just because the nature of search listings is really text," Blake said. "It does allow Yahoo to sort of put together a more robust offering."
Blake said that "right now, there isn't anything in the paid search landscape that either Google or Microsoft is offering" along these lines.
Even as Yahoo updates its search capabilities, it has been under pressure from Wall Street analysts to consider selling its search business to Microsoft. Recently, Microsoft's chief executive, Steve Ballmer, has repeatedly expressed interest in such a deal.
Carol Bartz, the new chief executive of Yahoo, has not specified her plans for Yahoo's search business.
"Maybe we should divest of some things, maybe we ought to focus a little more on the company," she said in a conference call last month with investors. "So, yes, everything's on the table,"
But, she added, "this is not a company that needs to be pulled apart and left for the chickens."