During the first quarter of this year, display could decline as much as 18 percent, while search is expected to grow 8 percent.
But Yahoo only saw display ad revenue decline 2 percent in the fourth quarter, thanks to its targeting technology. David Zinman, vice president for display advertising at Yahoo, said advertisers are still willing to pay Yahoo a hefty premium for display ads because they can choose which of the 500 million members of Yahoo's audience see their ads. Today, for example, a carmaker can pay Yahoo to show an ad to all the men between the ages of 24 and 29 in the Bay Area who have shown a recent interest in buying a car.
At the end of last year, Yahoo began sharing these capabilities with newspapers around the country. The relationship between Yahoo and the Newspaper Consortium, which includes the San Jose Mercury News and 795 other newspapers, allows Yahoo to sell target ads on the newspaper Web site and for newspaper salespeople to sell ads on Yahoo.
Leon Levitt, vice president, digital media at Cox Newspapers, said his company increased its display revenue by as much as 15 percent using Yahoo's technology. AH Belo, which owns the Dallas Morning News, posted an extra $1.2 million in revenue.
Companies like Aggregate Knowledge claim their technology can do even better than Yahoo. Pascal Bensoussan, vice president of products and marketing for Aggregate Knowledge, said his company could get even more value from online content by showing display ads that are targeted to shoppers that previously visited other Web sites. For example, someone who was browsing for an HDTV at Target could be shown an ad for a television while reading politics stories at the New York Times.
In a test by an electronics company, consumers who were exposed to personalized display ads were more than 5 times more likely to click on them and more than seven times more likely to make a purchase. Paul Martino, Aggregate Knowledge's chief executive, says such campaigns are 80 percent as effective as search advertising.
Yahoo launched its own retargeting service this week. Other companies that are boosting the effectiveness of display include Revenue Science, Adsdaq, and Turn.
Contact Elise Ackerman at eackerman@mercurynews.com or (408) 271-3774.
Display ads (top) found on most Web sites such as this winery ad on the Mercurynews.com site are not as effective as the search ads on Google.com.
Companies such as Aggregate Knowledge and ChoiceStream are looking to increase the power of display ads by personalizing the ads with unique products and offers tailored to individuals who are potential customers. Below is an example of a tailored display ad by ChoiceStream.
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