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Yahoo launches major upgrade to ad system

Yahoo launched a much-anticipated upgrade to its online advertising system, one the company termed revolutionary as it bids to emerge from the shadow of search giant Google.
/ Source: The Associated Press

Yahoo Inc. launched a much-anticipated upgrade to its online advertising system Wednesday, one the company termed revolutionary as it bids to emerge from the shadow of search industry leader Google Inc.

Playing to Yahoo’s strengths in graphical display ads and technology targeting pitches to users’ interests, the new Apt from Yahoo platform will initially involve the newspaper companies in a 2-year-old consortium led by Yahoo, which many joined hoping for relief from the decline in their industry.

The platform, formerly known as Amp, promises to make it easier for advertisers and publishers alike to buy and sell display ads, borrowing many of the self-service techniques that have made search ads lucrative for Internet companies, especially Google.

By tapping data Yahoo already collects on users’ preferences, Apt aims to help advertisers narrow their pitches to specific groups of customers because sharper targeting will let Web sites charge more for ads.

William Dean Singleton, vice chairman and chief executive with MediaNews Group Inc. and chairman of The Associated Press, said the typical newspaper now sells more than half of its inventory at deeply discounted rates because it can’t offer such specific targeting.

Singleton said Apt should help eliminate or reduce the need for deep discounts.

“If we can sell the amount of online advertising we are selling today at rates that were much more normal, you wouldn’t be hearing people talk about the woes of the newspaper industry,” Singleton said at a launch event during the ad industry’s Advertising Week.

It’s unclear whether the technology will give Yahoo the lift it needs. A previous technology revival focusing on search ads, called Panama, failed to resonate with Wall Street despite accolades from advertisers, and Yahoo has remained in a funk, its stock recently sinking to its lowest level in nearly five years.

The new platform, 18 months in the making, comes at an inopportune time because advertisers are pulling back spending as the U.S. economy weakens, said David Hallerman, a senior analyst with eMarketer.

But even if it isn’t a game-changer, Hallerman said, it can help Yahoo reach the companies that are still advertising.

In an interview with the AP, Yahoo President Sue Decker said Apt positions the company to capture growth in display advertising following several years of focus on search innovations.

Decker said Apt replaces legacy systems “created 10 or 15 years ago when the Internet first started.”

Noting that Google still is weak in display ads, Decker said Yahoo is trying to build the technology and assemble a large enough network of Web sites that it becomes “a must buy” for advertisers.

Apt seeks to automate many of the tasks now handled manually with display ads and allows Web sites to pool their available ad spaces so advertisers can make larger purchases more quickly, the company said.

Such automation has been crucial to the growth in search, but display ads involve more variables that have made automation challenging.

The technology could help newspapers’ Web sites, in particular, because of its large inventory of display ads and the comfort advertisers already have with newspapers’ brands, Hallerman said.

Online advertising at newspapers has been growing, but too slowly so far to compensate for steep declines in print advertising.

Yahoo is initially offering the platform to the San Francisco Chronicle and the San Jose Mercury News, both near the company’s headquarters in Sunnyvale, Calif. It will extend Apt to the 782 other newspapers in its consortium over the next several months and will open it to other sites, including its own, and to advertisers in 2009.

Shares in Yahoo increased 12 cents, or 0.6 percent, to $19.05 in mid-afternoon trading Wednesday.