Yahoo! Bets on Open-Network Approach

NEW YORK While Google extends its reach to sell ads on sites all over the Web, Yahoo! is appealing to big-name publishers with a different approach: You sell ads on our portal, we'll sell ads on your sites. The share-and-share alike approach is a cornerstone of Yahoo!'s effort to catch up to Google and compete with Microsoft and AOL, both of which are building large-scale ad platforms. But instead of seeking only to sell ads on a network of sites, Yahoo! is inviting publishers to also sell ads to their users who are on Yahoo! properties—something few of Google's partners can do. Yahoo! inked a series of these deals with WebMD, Forbes.com, Cars.com and Ziff Davis Media. All four agreements include provisions for cross-selling by Yahoo!'s sales group and the publishers. Yahoo has struck a deal with a group of over 200 newspapers to sell their inventory and allow those publishers to sell ads on Yahoo sites. The agreements are part of Yahoo!'s efforts to morph from a portal-centric business to complement it with network businesses. It added ad network businesses like Right Media and Blue Lithium.The agreements come at a time of transition for Yahoo!, which has seen its growth slow in comparison to Google and other Web rivals. Separately, Yahoo! reported its third-quarter revenue grew 12 percent from the same period last year to $1.8 billion. Net income was $151 million, down about 5 percent from the year-ago period. "Typical ad network relationships are one way," said Todd Teresi, svp of Yahoo!'s publisher network. "The open approach is going to become a new paradigm of how partnerships are struck." Despite all the talk about an "open ecosystem," for a publisher like Forbes.com the deal is more a way to work with a trusted partner for its remnant inventory, which can make up 20 percent of the site's impressions some months, according to CEO Jim Spanfeller. Forbes.com had not been using any display ad networks because they mostly sell low-CPM, mass-reach ads that do not fit in the Forbes.com environment, he said. Yahoo!, which has been a syndication partner for Forbes.com for several years, makes a good alternative. "We think Yahoo!'s drive to have quality sites is better than others," Spanfeller said. We're more comfortable being involved with this kind of network. Yahoo! is differentiating from Google and other network properties by keeping its focus on high-quality sites, rather than mass reach sites like social networks, said David Karnstadt, svp of North American ad sales at Yahoo!. "We focused here because they have a highly engaged and valuable audience," he said. "That can't be said of every broad site." Yahoo! executives tend to use the term "ecosystem" to differentiate itself. This way, Cars.com can extend the reach of its audience by targeting its users when they appear on Yahoo! properties. At the same time, Yahoo! uses its behavioral targeting technology to find niche audiences on many sites. Toyota, for example, could run Prius ads to users who had recently visited Yahoo! Green's alternative fuel section when they were reading pages on not only Cars.com but also Forbes.com, WebMD and Ziff Davis' PCMag.com. "We think this strategy where you value the unique property is better than a strategy that will centralize media planning and buying in one central location," said Teresi.

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Yahoo! Bets on Open-Network Approach

Brian Morrissey

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