• by Steve Smith , Staff Writer @popeyesm, July 6, 2007

Sports cars and SUVs in Michael Bay’s “Transformers” aren’t the only things reassembling themselves on the fly this summer. Last week, Yahoo launched a SmartAds product that automatically morphs ad creative according to a targeted user’s individual profile. The Yahoo behavioral engine is but one targeting lever a SmartAd can pulls to determine which combination of creative elements to serve a user. It is this layering of multiple target criteria that can double and triple the effectiveness of display ads, says Senior Vice President of Display Marketplaces Todd Teresi. SmartAds launched last week in the travel segment, but expect to see it soon in other categories.

Behavioral Insider: Where are SmartAds now running on Yahoo?

Todd Teresi: The technology is meant to run anywhere and we are first rolling it out on the Yahoo Network. But we see it expanding to things like the Right Media Exchange in the future.

Behavioral Insider: What ad segments are you focused on?

Teresi: Travel is the first vertical. primarily because of the direct marketing capabilities SmartAds provide, the ability to get down to more targeted messages for the individual consumer. Likely verticals to follow have very specific opportunities to leverage this type of targeting within the creative. The auto category could provide very targeted messages that contain dealer information, rebate offers that vary by geography, etc.

Behavioral Insider: Since you mention direct marketing, are SmartAds priced on a CPC or impression basis?

Teresi: It is priced by how it fits the marketers’ business model. For some the cost-per-click may be a better buying construct. Other marketers really value specific placements. A marketer might want to purchase an all-day exclusive on the Yahoo home page and use this technology to better target their creative to Yahoo users on the home page. That might be more of a premium purchase on a CPM basis.

Behavioral Insider: Explain the kind of creative deliverables the advertiser provides.

Teresi: We built the platform to embrace the elements that matter most to the marketer. One marketer might decide that as you look at their objective they want to target background of creative to men vs. women and they may want to generate lease offers by the various DMAs that matter to them. And they might be the only two things that matter to the advertiser; their brand and logo may be the static creative inside of every ad. It really enables the marketer to match the creative to the specific business needs they have.

Behavioral Insider: What did the test runs tell you about effectiveness?

Teresi: In the very, very simple measure of a click-through rate that we know is not an end-all, be-all measurement, but as a simple proxy we saw 2x to 3x lifts in CTRs. When you start talking about those kinds of improvements you talk to the heart of the direct marketer.

Behavioral Insider: Focusing on the BT piece of this, what segments are applied?

Teresi: In travel it is looking at fare routes and destinations. So if you have recently been on Yahoo Travel and search for airline routes for New York to San Francisco, that becomes part of the profile of the user. What that helps us do is put them in a category of people interested in travel fares. So ultimately that can become a targeting criteria off of which SmartAds can work.

Another example involves home locations. Sometimes we can glean geography from IP address to more sophisticated behavioral information lik,e what is a user’s home profile set for their weather? What activities do they show with their map? They help us determine this person may be from San Francisco. And many airlines have teaser vacation opportunities for different times of year and from origins. Giving them the knowledge of the consumer we glean from behavioral insights is something [they can use for targeting.]

Behavioral Insider: So it is not just applying the profiles, but also using the general behavioral knowledge from the network?

Teresi: We might see people on Yahoo autos configuring hybrid autos. That information may be valuable to help Toyota or GM build specific ads targeted to the group of users that are viewing these vehicles. You not only glean information about consumer interest but you use the creative assembly platform. This person is in San Francisco because we know that from the default weather locations. So we want to pull in the data feed we have within Yahoo Local for the local dealership for Toyotas. We want to pull a real time inventory feeds from Toyota. So you can present what price someone pays at that dealership.

Behavioral Insider: So that ad is being assembled along several axes, behavioral, geographic, gender, etc.

Teresi: That’s what we think is exciting. It’s not just the single capability of creative assembly. It is when you marry it along with what we’re already been doing on the BT side.  

Behavioral Insider: In BT there is always the questions of recency. Is there a standard application for how long that purchase cycle is?

Teresi: In our BT platform we take recency into account. We may have a different recency for something like an auto purchase with a longer cycle than a digital camera which is not a considered purchase and much shorter. We use and tune the different selects. This person was searching heavily for digital cameras but three months ago, so we don’t want her to be part of that bucket.

Behavioral Insider: Another classic BT concern is over scale.

Teresi: One of the reasons we think we can pull this off is the 500 million people around the world using the site. You have the ability to do great aggregations of quality audiences at scale. The fundamental scale of the Yahoo Web site and our partners give us incremental scale that help us build up the robustness of the individual audiences. The technologies are part of it, but equally important is the consumer insight and knowledge.

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