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More efforts from Yahoo to show signs of life, particularly in the advertising market

Yahoo Inc. is trying to do what one might have expected it to do long ago -- solidify plans to create a single ad system, competitive with advertising leader Google.  Of course the logistics of such an effort are daunting but the company has little choice.  It is struggling under its own "Sword of Damocles"-- Microsoft CEO Steve Ballmer's threat that if the company doesn't accept its buyout offer within three weeks, it will attempt to depose Yahoo's board and management

In a power play, Yahoo's top brass rebuffed Ballmer's threat, again demanding a higher price.  The move has left the company desperate to  convince its own investors that it can beat Microsoft's offer with new growth.

A deal with competitor Google is out of the question, according to sources.  So for Yahoo, it must struggle to fulfill the reverse of the popular adage "if you can't beat them join them"; it can't join forces with Google, so it must try to beat Google against all odds and against a ticking clock.  Yahoo believes the crux of this effort will be its new management programs and its new advertising system.

With the new system advertisers and Web publishers will finally be able to buy and sell web ads including graphical banners, through a single system, across Yahoo and its partner sites.  The new system features standardized means of targeting ads at groups of consumers.  Google's ascent to dominance was largely fueled by such targeted ads.  Consumer information gathering is one of the hottest fields, with everyone from ISPs to search engines trawling for information relating to a consumer's lifestyle, whether the consumer likes it or not.

Microsoft and Google already have similar systems, with Google being the more successful.  Google's system was greatly helped by the acquisition of advertising giant DoubleClick last year.  Yahoo acquired a number of advertising firms, but has failed to integrate them together into a single cohesive effort until now.  It calls its new cohesive platform AMP.

AMP will be released, according to Yahoo, in Q3 2008 -- at first just for use by newspaper companies, one of its biggest advertising partners.  Later in the year it will be extended to additional Web publishers, advertisers, agencies and online-ad networks.  Besides display type ads, Yahoo hopes to implement search, mobile and video ads into the platform's offerings.

In the new system Web publishers can manage the advertisements on their sites and can sell ads on behalf of the program's participants, in exchange for a small commission.  Advertisers can buy ads on many sites, targeted using standardized geographic information, demographic info, and other targeting information.  Rachel Happe, a research manager at IDC in Framingham, Mass., says the move is big whether Yahoo is acquired or not.  Says Happe, "That's huge in terms of reducing friction in the marketplace.  If Microsoft buys Yahoo, they would be foolish to dismantle this."

Many analysts are concerned Yahoo will struggle to deliver AMP, previously known as Project Apex, on time.  Yahoo's previous largest effort, Project Panama, was finally released and currently has greatly improved Yahoo's search ad revenue, however the delays in its released were extremely costly and part of why the company has lost so much ground so quickly to Google.

Michael Walrath, a Yahoo senior vice president, acknowledged that AMP is an even larger challenge, and will be tough to deliver.  He states, "It's a larger undertaking than Panama was," but continues that Yahoo is "very confident" that the release date will be met.

While some are concerned that the possible Microsoft acquisition could scrap or delay the promising program, most are not very concerned.  Says Jay Smith, president of Yahoo partner Cox Newspapers Inc., a division of Cox Enterprises Inc, "Will there be bumps in the process? Sure there will be.  But based on what I've seen of Yahoo to this point, I think we'll get by those bumps."

Mr. Smith revealed that Yahoo has 500 to 700 engineers, about 4 to 5 percent of its total workforce, working on the project a figure that Yahoo has declined to reveal.

The effort is certainly a promising one, but one has to wonder -- is it too little too late for struggling Yahoo?

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To what extent
By jhinoz on 4/8/2008 11:50:33 AM , Rating: 2
Is this Yahoo! copying part of Google's business model?

"well our way isn't cutting it, let's try what he's doing"

Would this have happened at this time if the MS offer was not on the table? Doubt it.

RE: To what extent
By woofersus on 4/8/2008 1:21:39 PM , Rating: 3
The question in my mind is whether they're actually trying to stop the takeover and drive the company forward, or just trying to pump up the price.

Yahoo's been fairly haphazzard in their marketing of the Yahoo! brand for a marketing/advertising company. They don't know who they're catering to, or what products/services really matter, AND they've botched a few that had real potential. I just don't see them competing with google unless they have a change of focus. I don't think this is the kind of change of focus that will make them successful in a real way. It's just something to make the stockholders feel good. It might be a good system when it's done, but yahoo's not attracting type of traffic that people want when doing pay-per-click advertising for the most part.

RE: To what extent
By tmouse on 4/9/2008 8:11:18 AM , Rating: 2
Sometimes the worst thing you can do is rush a potentially good idea out. It will be interesting to see if the implementation works well or turns into a buggy, rushed, mess. It can be very difficult to determine if the board really cares about a company or is just trying to further fill out their "golden parachutes" in these types of situations.

Jump Ship
By UppityMatt on 4/8/2008 12:37:40 PM , Rating: 1
Personally, if i was making this decision i would let MS buy me out and i would just retire. But hey thats me.

RE: Jump Ship
By rdeegvainl on 4/8/2008 12:47:31 PM , Rating: 5
Your Internet ad was brought to my attention, but I can't figure out what, if anything, CompuGlobalHyperMegaNet does, so rather than risk competing with you, I've decided simply to buy you out.

This is it Marge. I've poured my heart and soul into this business and now it's finally paying off. We're rich! Richer than astronauts.

Homer quiet. Acquire the deal.

I reluctantly accept your proposal!

Well everyone always does. Buy 'em out, boys!

Hey, what the hell's going on!

Oh, I didn't get rich by writing a lot of checks!

Microsoft as AMD?
By bupkus on 4/8/2008 5:16:46 PM , Rating: 2
Could it be that Microsoft is in the unlikely position that many believe AMD was when they prompted Intel to get off its duff and start producing better products?

Yah... thanks Microsoft. The only difference is MS hasn't kicked anyones butt, they just buy it.

As I read the above article I was considering lam blasting Yahoo for waiting until the 23rd hour to actually improve their business model but it appears they've been working, albeit ineffectively, in doing just that.

"Can anyone tell me what MobileMe is supposed to do?... So why the f*** doesn't it do that?" -- Steve Jobs
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