Last June, Yahoo!’s CEO Jerry Yang announced, "We believe that the convergence of search and display is the next major development in the evolution of the rapidly changing online advertising industry.” More recently, Google CEO Eric Schmidt echoed this notion when he indicated his company would focus on "bringing the science of search to the art of display."
Yahoo! has not been idle on this front, and last week they put some meat on the bones by announcing Rich Ads in Search, which brings more art and interactivity into the search results picture, which will appeal to brands, and probably to some consumers as well. The only folks who will take exception are those for whom the utilitarian serenity of search results pages is sacrosanct. Anyway, this is one half of the convergence story: bringing display branding quality to the search environment.
Today (Thursday) at the IAB annual leadership meeting in Orlando, Yahoo! gave form to the other half when it announced “search retargeting,” which gives it the ability to allow advertisers to target display advertising based on a user’s search behavior. In Yahoo!’s words:
…for example, if you searched for “Toyota Prius” Yahoo! will be able to serve display ads for Toyota Prius to that user across the Yahoo! network
First, the upside: there’s little doubt that search retargeting could significantly raise the yields on a lot of long-tail display ads across Yahoo!’s network, where CPMs have been melting in the heat of a bad economy. At the same time, it could raise the quality and relevance of those ads as established brands take notice, making for a better consumer experience, and the brands themselves could get much better value out of targeting based on search-powered relevance. A win for everyone.
Now for the hard part. As of this writing, we’re probably hours away from a response from privacy advocates that’s unlikely to be warm.
The FTC recently seemed to hand marketers and portals a victory over privacy advocates by backing self-regulation for targeted online advertising, which has raised hackles and perhaps primed them for a fight. For its part, Yahoo! has taken great care in the past to burnish its privacy credentials and certainly needs to avoid a privacy flare-up at all costs, but privacy reassurances were surprisingly absent from this announcement, as were implementation details that might enable one to form one’s own conclusions. It must have been a difficult public relations decision whether to call out the issue or not.
So, if you’re searching for a divorce lawyer on Yahoo!, will your spouse get tipped off the next he uses the PC and notices his Yahoo pages are plastered with divorce lawyer ads? Not likely: Yahoo! is bound to be very selective of categories for this kind of targeting, and offer clear opt-out mechanisms if you don’t want your search to be targetable. But will this create a new cache of retained search data, prized by thieves and despots? No, I’m certain Yahoo! will correlate search terms with behavioral categories on they fly without retaining anything specific, just as Phorm does, and head off this objection from the start.
What’s more, Yahoo! is not the first display advertising network to offer search retargeting. AOL’s Advertising.com, WPP’s 24/7 Real Media, Microsoft’s DrivePM, AudienceScience, even Yahoo’s own BlueLithium network have all offered some variation on this for at least two years, although none with scope of Yahoo!’s new offering. Only Google, it seems, has for now avoided this form of search/display convergence. Perhaps they’ll wait to see how Yahoo!’s effort plays out first.
Nevertheless, I think this will be worth watching closely.