Google / Yahoo Contextual Partnership POV

March 24th, 2013 . Comments Off

POV about the Yahoo partnership with Google.

Written by:

Mike Pocci: Manager, Display Media (mike.pocci@rosetta.com)

Rebecca Keen: Director, Paid Search (rebecca.keen@rosetta.com)

Executive Summary

Yahoo and Google have developed an agreement that allows Google to supply text-based ads across a portion of Yahoo’s owned and operated inventory and certain co-branded sites
Yahoo’s goal is to deliver a higher volume of relevant and targeted ads across their network by expanding to Google as a partner, as well as obtain new advertisers and grow the company’s revenue

Rosetta believes that the partnership is a positive step and creates further opportunity to effectively supplement Yahoo’s contextual platform.

Partnership Overview

Yahoo has continued to search for new partners that can enhance their media platform by increasing the scale, relevance and targeting of their advertising, and they have finalized an agreement with Google to accomplish just that. The agreement, which is a non-exclusive, trial partnership (with no confirmation of a long-term partnership), will allow Google to supply text-based ads across a portion of Yahoo’s owned and operated inventory (including channels such as Yahoo! Sports or Yahoo! News) as well as certain co-branded sites. The agreement encompasses text ads only and does not include any standard display, rich media or video ad formats.

This partnership makes sense, as Yahoo CEO Marissa Mayer came from Google and still has relationships at the company (she recently brought on former Google president of partners business solutions Henrique de Castro as COO as well). In addition to drawing new advertisers and growing revenue for the company, Yahoo believes that the partnership will deliver higher volume and a more relevant and targeted ad experience across their network. Yahoo will continue to target users with the most appropriate ad messaging based on the content they have viewed, but Google will now be able to access this inventory as well.

Why Is This Important?

This partnership provides a way for Yahoo to expand their network and continue to serve even more highly relevant ads to their users. While this will not cause any change in the site experience for consumers, Yahoo will be able to maximize their contextual content-matching algorithm and targeting system by bringing Google into its inventory pool.

This will have no impact Yahoo’s Bing relationship, as Bing is still the company’s exclusive partner for search. The contextual partnership is strictly a text-based display advertising deal (so, in addition to Bing’s ability to serve text-based ads across Yahoo’s contextual network, Google now has the ability to do the same).

We believe that this development is a key step for Yahoo to continue enhancing their contextual offering. However, it does not impact all aspects of Yahoo’s media solution. The agreement is strictly based on contextual media buying. There are no behaviorally-based audience-buying solutions that will be integrated between the two companies at this time. There is also no impact on Yahoo’s exchange (Right Media Exchange), which is not a part of the agreement at this time (there is zero content availability across Google and Yahoo exchanges).

What is Rosetta’s Response?

We believe that this partnership is logical and has the opportunity to effectively supplement Yahoo’s existing offerings with a stronger contextual platform. The partnership is considered an “alpha” release at this time, as Yahoo is testing the new model and does not currently have any information on whether they will be releasing Google further into their platform.

From a pricing standpoint, we anticipate that the higher amount of inventory in the Google system could potentially lead to lower CPMs across the Yahoo platform (especially if the program is expanded beyond a trial), as supply will effectively increase. We will be monitoring the roll-out of this program and its success to determine the actual impact.

Finally, as shown by the efforts of both Google and Yahoo in the digital media space, ad experiences have continued to become more targeted and relevant, and we as an industry should not lose sight of user privacy and controls. We should strive to keep communicating the idea of transparency to our audiences (with more relevant ads, we may see increased questioning from consumers related to why they’re being targeted, so we need to have an answer—ideally, a proactive answer). Yahoo has done a great job being forthright with consumers through their AdChoices program and should continue to keep consumer privacy top-of-mind as this partnership develops.

Advertisers should not be concerned regarding traffic quality being affected. If further releases will happen, our Yahoo team will report to us accordingly so that we are able to monitor traffic for any changes. We will continue to stay aware of any developments within this partnership and will seek out updates on the success and monetization of the new contextual model. We will also be on the lookout for a deeper partnership between Google and Yahoo, as this may only be a first step (although Yahoo has not shared any plans to do so in the near future).

How Does This Integrate Across Paid, Owned and Earned Media (POEM)?

The primary point of channel crossover within this contextual partnership occurs within the paid media space, between display advertising and paid search. The ad format itself, as described above, is a text-based display ad, which is reminiscent of a standard paid search listing and has the opportunity to capture user attention based on its relevance to the surrounding content. In addition, the technology used to deliver these ads is powered by keyword-based targeting functionality, a key element that drives paid search marketing. This is a fitting example of continued integrated paid media planning and buying.

In addition, the partnership may allow Google to gain additional insights on user behaviors through Yahoo’s platform, potentially leading to opportunities for additional audience building and targeting. Yahoo will be continuing to ensure that this integration will not impact the quality of their platform, hence the initial, trial partnership. With each release, Yahoo will be reviewing to ensure that Google continues to align with their product and that quality does not decline.

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