NEW YORK Yahoo! and Google appear to be headed for a new battle in their quest for brand advertising dollars migrating online.
Both Internet giants are prepping their platforms to handle not just search advertising, but also display ads favored by brand marketers. Google's acquisition last week of DoubleClick, which serves display ads across the Web, gives it the foundation to potentially play a much larger role in brand advertising.
Yahoo! hopes to convert its leading position as a conduit for Internet brand advertising into a far-flung network that reaches users across the Web and on their cell phones, CEO Terry Semel told financial analysts yesterday.
"We intend to leverage our deep audience insights to create full-fledged advertising networks with a marketplace that meets supply and demand both on Yahoo's valuable owned and operated network and across the entire Internet," he said, according to a transcript of the call on SeekingAlpha.com.
Yahoo! is already selling ads on eBay through a partnership it struck last May, and it has begun a mobile ad network. This week, it added four more partners to a newspaper consortium that, among other provisions, calls for Yahoo! to sell some of its ad space on over 250 newspaper sites.
The goal is to make it just as easy for brand advertisers to buy space online as it is for direct-response marketers, said Sue Decker, head of Yahoo!'s advertising unit.
"We must generate the greatest advertising demand by offering marketing solutions the way that advertisers and agencies want to buy them by increasing transparency, openness, and decreasing buyer friction," she said.
The ad network pronouncements came as Yahoo! reported a drop in profits and slow revenue growth for the first quarter. The company said it is at least a quarter away from realizing the benefits of its overhauled search advertising system, known as Panama.
"We are still in the early days," Semel said. "We have already seen significant increases in the relevance of our most prominent sponsored search ads and have heard from our advertisers that they are seeing meaningful improvements in ad performance."