Enhancements come as Department of Justice seeks proof of Yahoo's intent to be a contender in search advertising.
Yahoo has unveiled more precise geo-targeting options for search advertisers. Panama users can now deliver campaigns to cities and Zip codes, whereas previously they could only carpet bomb whole states and designated market areas.
The new granularity one-ups Google's local ad capabilities, which are limited to city-level targeting.
It also comes as Yahoo faces pressure from the U.S. Justice Department to show its intent to innovate around search ads. The DOJ, in its investigation of the company's outsourcing deal with Google, has listed such proof among the demands it hopes to have met before it's willing to green-light the tie-up, according to a Wall Street Journal report.
In a statement that seemed crafted to address the DOJ's concerns, Yahoo said the new features are "reinforcing its commitment to be a leader in search."
Greg Sterling, founding principal of Sterling Market Intelligence, noted it's unlikely Yahoo undertook its enhancements to appease U.S. investigators. However, he said the move may serve to kill two birds with one stone -- convincing both advertisers and investigators that it still means to provide a serious alternative to Google.
"There's a process that's been going on for a while," said Sterling. "Having said that, I would imagine this is something that they see as contributing the impression they're not going to become complacent."
He added, "It's part of an argument they're going to make but I think it's going to have it's own...rationale.""
Yahoo's new Zip code targeting comes with an interactive mapping interface marketers can use to choose cities and Zip codes. The city menu includes about 3,500 municipalities in the U.S and Canada.
Both Google and Yahoo use IP targeting, among other factors, to identify audiences by region, and both offer disclaimers that mention the approach's imperfect accuracy. Yahoo's campaign targeting notes, "Geo-targeting accuracy is not guaranteed and may vary depending on the level of targeting selected, as well as other factors."
Sterling noted that the next phase of geo-targeting innovation may come as marketers gain access to neighborhood audience segments through technologies such as WiFi triangulation.
"It starts to get really interesting when you can go down to the neighborhood level," he said. "That's when you've got Census data showing who lives there."
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Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects.
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