Yahoo to launch blog ad network

As previously reported, the Sunnyvale, Calif.-based company has been working for months on a self-serve advertising service tailored to bloggers and other small Web publishers, a move that homes in on Google's territory.

While Yahoo and Google already go head-to-head serving major search-advertising partners such as America Online, Google has largely enjoyed a monopoly delivering its signature text-only ads to smaller content sites, including blogs.

Now Yahoo will play to that constituency and challenge Google's pricing power in one of the fastest-growing online mediums: blogging. Like Google's service, Yahoo's self-serve product will display text ads deemed relevant to the content of specific Web pages. Advertisers pay only when a reader clicks on their ads. Yahoo and publishers will split the fees.

Yahoo declined to comment for the story.

The service will undoubtedly turn up the heat in Yahoo and Google's ongoing rivalry to dominate Web search. It will also help Yahoo's push to expand its advertising reach to small and medium-size publishers.

Laying the groundwork in this area earlier this year, Yahoo released Y!Q, code that analyzes the text of a Web page and shows search results based on its content. Publishers can add the code to their Web pages to automatically generate a list of related links.

Tapping small publishers offers a promising growth path, given Google's earlier efforts in this niche.

In June 2003, Google expanded its ad services for large publishers, dubbed AdSense, adding a self-serve, automated product specifically aimed at small sites. As opposed to search-related ads, which are triggered by keywords entered into its search engine query bar, AdSense ads are targeted to the content of a page and its meaning. For example, a news story about a soccer match might display a sponsored link for soccer gear.

Google does not break out AdSense sales but includes them in a broader category that encompasses all syndicated search revenue. Collectively, those businesses made up 46 percent, or $630 million, of Google's $1.38 billion in revenue in the second quarater of 2005.

Bringing ads to small publishers would expand Yahoo's current advertising portfolio, which caters to its search engine and larger Web sites.

In this vein, Yahoo's service will help the company expand its brand name to small sites. In April, Yahoo formally renamed its commercial search subsidiary, Overture Services, to Yahoo Search Marketing. Overture had served ads to publisher Web pages since 2003, in a program called Content Match, but it only catered to large publishers, such as The Financial Times.

Yahoo's new service will differ from Google in that it will add human editorial judgment to the selection of ads for content pages. In comparison, Google's service relies on technology.