Context Is King

“Get rid of the friction” is Yahoo President Susan Decker’s new mantra, at least insofar as online ad buying ads is concerned.

(The phrase may well apply to the company’s ongoing waltz with Microsoft, too, but we won’t get into that. If the contest for the Democratic nomination can end, so can that saga. Or so one hopes.)

“Most of the innovation in the last five years has come from search,” Decker said at this week’s Advertising 2.0 conference in New York City, “knowing intent through a search box,” as well as the much less complex auction marketplace for buying search advertising than display ads.

What Yahoo is committed to now, according to Decker is “applying the same art and science to display advertising.”

AMP, announced in April and scheduled for a rollout this summer, is a first important step in this process. The ad management platform will handle display, search, mobile, and video ad buys. It combines ad sales with ad management tools across a large — and impressively growing — volume of digital media.

Not only has Yahoo’s Newspaper Consortium swelled to 779 members, the company announced this week it will also be handling display inventory on Wal-Mart’s online inventory. Combine Wal-Mart with Yahoo Shopping and eBay, and the company’s reach extends to 76 percent of online retail shoppers.

Decker contrasted AMP’s simplicity with the days or even weeks of phone calls, e-mail messages, and faxes traditionally required to buy media on just one online property.

“AMP is a very non-technical process. Within minutes you can place a campaign across many publications in an open, transparent environment. It removes the complexity from display buys.”

Removing friction from the agency role is another goal Yahoo appears to be achieving. It secured an alliance with WPP Group last month. Its digital agencies will buy display ads through Yahoo’s auction marketplace Right Media Exchange. This week, Decker announced Havas Digital is on board with the program, too — a significant win.

Decker’s final announcement was the Yahoo Circular program for retailers, which will deliver coupons to users based on known intent and geographic location.

She concluded with social. “We have the largest latent social network in the world,” Decker said, referring to Yahoo’s millions of registered users on products ranging from e-mail and photo-sharing to music and dating. It’s dormant right now, but she promised the company is working to reduce all those profiles into a single, unified profile for each user to offer advertisers context.

The Grass Is Always Greener?

After Decker spoke and some sandwiches were consumed, a group convened to discuss the future of search (inexplicably, a portion of that discussion focused on advertising of social network platforms. Huh?). The consensus among the search geeks? They don’t get no branding respect — or brand ad budgets, all of which are funneled off to display advertising. Somewhat predictably, the agency guy on the panel, Carat’s search engine marketing director Randy Schwartz, bemoaned this fact most passionately.

What he didn’t mention is the fact that search gets the highest percentage of ad spend dollars: 41 percent, nearly double display’s 21 percent share of $21.2 billion spent on online marketing last year, according to the latest research from the Interactive Advertising Bureau.

It’s an interesting state of affairs. Search is the workhorse of online marketing, raking in the dough, but devoid of the creativity, glamour, sound, motion, and overall cachet of advertising — particularly display advertising.

On the other side of the fence, the Susan Deckers and Steve Ballmers of the world are salivating over the lion’s share of the pie that search commands — particularly given the fact they’re essentially eating Google’s leftovers. To be more precise, in April Google ate 68 percent of that pie, according to Hitwise, leaving what amounts to table scraps to be divided between Yahoo, MSN, and Ask.com.

Buying display ads needs to be simpler — and not just because search is a comparatively easier buy for marketers (in campaign management, search gets really complex). It’s also because brands, marketers, and advertisers have other options, such as rolling their own media. They can create branded destinations they build themselves or develop content strategies for their own sites that reduce their reliance on display ads.

Meanwhile, the search guys know wish fulfillment will be in their not-so-distant future. Display will soon collide with search and create opportunities for search-triggered brand ads.

As Decker put it, “The story is the innovation to come. In five years, today’s Internet will look like black and white television.”

Yahoo’s innovating like crazy. But so are Microsoft, Google, and hundreds of other players in the space. And everyone’s envying something about the neighbor’s lawn.

Network with ClickZ! Join Rebecca for A Night Out With ClickZ, June 24 at the Seaport Hotel in Boston. The drinks are on us from 5 p.m. to 8 p.m.!

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