Yahoo SmartAds - Start of the next wave of ad targeting

Well, it was bound to happen, this week Yahoo! announced their SmartAds platform to allow advertisers to better target potential customers as well as more flexibly create ads for specific  markets.  The flexibility in ad creation is a neat feature for advertisers and seems fairly unique, but the improved targeting is the piece that is really going to have the greatest impact both on advertising dollars for Yahoo! and the continued debate over online privacy concerns.

More than a technical feat, the improved targeting features seem to mainly be a shift in privacy policies for Yahoo!.  The example given in Yahoo’s press release is: “if a user is browsing for hybrid cars in Yahoo! Autos and has selected San Francisco as their default location in Yahoo! Weather, Yahoo!’s SmartAds platform can assemble and deliver a display ad in real time that showcases a hybrid vehicle from a major auto brand, as well as local dealer information and current lease rates”. 

I knew this was coming but, honestly, I thought Google would do it first.  The privacy implications of this new platform are significant, but not unexpected. Those little privacy policies that we all blindly accept when we sign up for Yahoo!, Google, and Microsoft services basically give those companies access to use the information you give them in nearly any way possible.  Google’s Gmail has been known to target ads based on the content on your emails (though they claim to not store that information for later use) and geotargeting based on your IP address has been around for a while, but these companies are finally starting to fully leverage their huge databases of information about your online habits to maximize advertising dollars, and Yahoo! appears to be leading the way with their new SmartAds platform.

Its not illegal, you gave them permission to use the information when you created the account, but this could be the beginning of a new wave of advertising.  The Microsoft, Yahoo and Google databases have huge amounts of information about you, but they’ve been resistant to merge it all together mainly, I suspect, for the bad press it could generate regarding privacy concerns.  Now, the floodgates are starting to open.  The actual experience for the user may not be too bad, targeting ads aren’t necessarily a bad thing, but they are creepy.

Maybe you buy a plane ticket from LA to Hawaii through Yahoo! Travel to leave on July 6th and return on July 20th.  Yahoo knows your home city is normally Los Angeles (your home zip is an LA zip code) so they target L.A. based ads to you most of the time, but now they know you’re going to be on a trip to Hawaii for two weeks.  Maybe they’ll target you with Hawaii tour package ads leading up to your trip then, if you log into your account while your in Hawaii, they’ll target you with Hawaii restaurant ads and more local advertising.  If you visit Yahoo! Health a lot, be prepared to get targeted with fitness and nutritional ads in your Yahoo search results.  If you track your stock portfolio in Yahoo Finance, be prepared to see ads related to investing in the rest of your Yahoo experience and maybe even targeted ads based on the companies you invest in.  Wouldn’t Microsoft like to know, when they advertise to you, that you’re an investor in their company vs. just an average joe?  Wouldn’t it be interesting if Yahoo could use the value of your Yahoo! portfolio to know, not only in general terms what your income is (based on the demographic data you gave when you signed up), exactly how much money you have in your 401k and stock accounts?  If they served that data up to advertisers, they would be a huge increase in ad revenue.  If you have a very large 401k plan balance, maybe they’d target you with financial advisor advertisements.  If you have stock options in your portfolio, maybe they’d target you with options-trading workshop advertisements. 

Yahoo has taken a step toward the future with SmartAds.  Google and Microsoft will soon follow soon.  These companies are building up huge databases about your online activities and they are going to start heavily leveraging them going forward.  I’m surprised its taken this long, but get ready for a big change in your online experience as these community/portal sites start to turn up the heat on peddling their advertiser’s products to you.

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