Yahoo promises to 'amp' up ad platform - East Valley Tribune: Business

Yahoo promises to 'amp' up ad platform

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Posted: Monday, April 7, 2008 10:10 am | Updated: 11:55 pm, Fri Oct 7, 2011.

SAN FRANCISCO - Yahoo Inc. believes it's poised to revolutionize online advertising after years of being outmaneuvered by rival Google Inc.

But the slumping Internet pioneer might not get the chance to show off the latest improvements to its online advertising platform unless it can convince increasingly impatient investors that the new approach will produce a bigger payoff than Microsoft Corp.'s unsolicited offer to buy the Sunnyvale-based company for more than $40 billion.

Hoping to gain wiggle room, Yahoo is releasing more details about its effort to become a one-stop shop for selling and distributing online display ads - the Internet's equivalent of billboards.

The upgrade, called "Amp," won't be available until some time this summer, and then only on a limited basis among more than 600 newspaper publishers trying recover some of the revenue that the Internet has siphoned from their print editions.

Nevertheless, Yahoo will begin promoting Amp on Monday with an online video demonstration of a system that the Sunnyvale-based company promises will make it easier for advertisers to aim their messages at specific demographic groups across scores of Web sites.

"This is a revolutionary approach that will allow marketers and publishers to deliver a more compelling experience for consumers," said Hilary Schneider, Yahoo's executive vice president of global partner solutions.

Those remarks echo similar boasts that Yahoo's top two executives, Jerry Yang and Sue Decker, made at an online advertising conference in late February. At that time, the new system was still operating under the code name "Apex," short hand for Advertiser Publisher Exchange.

Amp will rely heavily on data that Yahoo collects about people's preferences at its own Web site as well as other online destinations. The practice, known as "behavioral targeting," has raised privacy concerns, but Yahoo - like rivals using similar tracking technology - believes consumers will appreciate seeing more ads tailored to their individual interests.

Yahoo's new platform will be competing against similar technology recently acquired by Google and Microsoft. Google bought DoubleClick Inc. for $3.2 billion primarily so it would have a better vehicle for selling display ads. The same objective drove Microsoft's $6 billion purchase of aQuantive.

Amp didn't cost Yahoo nearly as much. Besides relying on engineering developed by its own engineers, Amp draws on technology that Yahoo picked up by buying online ad service Right Media and Blue Lithium last year for a total of $781 million.

Selling advertisers on Amp may prove to be easier than convincing Yahoo's shareholders that the new platform is a better bet than selling to Microsoft, whose unsolicited takeover offer was initially valued at $44.6 billion, or $31 per share.

Yahoo maintains its franchise is worth a lot more, partly because of promising new advertising ideas like Amp.

But investors have reason to doubt Yahoo's judgment after two years of disappointing results.

"They have a little bit of a credibility problem right now," Jupiter Research analyst David Card said.

In a sign of the skepticism dogging Yahoo, Wall Street hasn't embraced the bullish optimistic outlook that the company released last month to illustrate why its board of directors rebuffed Microsoft's bid.

Yahoo projected its 2009 revenue, after subtracting ad commission, will total $7.1 billion, up 25 percent from this year. The company expects its 2010 revenue to climb another 25 percent to $8.8 billion.

Analysts have much lower expectations, with their average revenue estimates standing at $6.4 billion for 2009 and $7.4 billion for 2010.

Amp isn't the first advertising upgrade that Yahoo has touted as a financial catalyst. Last year, the company rolled out a much ballyhooed formula called "Panama" that was designed to do a better job of displaying text-based ads alongside online search results.

Although most advertisers applauded Panama as an improvement over the previous system, it wasn't enough to lift Yahoo out of the financial doldrums that have depressed its profits since 2005. The downturn opened the door for Microsoft's bid.

Just how much longer Yahoo can fend off Microsoft remains uncertain.

On Saturday, Microsoft said that if a deal was not reached by April 26, it would launch a hostile takeover at a less attractive price. If Microsoft pursues that option, Yahoo's annual shareholders meeting will be the most likely forum for the showdown. Yahoo must hold the meeting by July 12, right around the time Amp is supposed to debut.

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