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Yahoo and Google in online advertising dual May 1, 2007

Posted by Daniel Gardner in Advertising, Current Events, Google, Internet, TechCrunch, Yahoo.
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Many companies (particularally conservative corporates) like the machine gun style of display advertising, taken from  traditional advertising mediums such as Print and Television and thrown into the 21st century by putting them online, basically this method of advertising involves finding websites that attract there target demographic, placing advertisements and opening fire, hitting many people with only a few being there actual targets.

For branding purposes this type of display advertising works well as many eyes view your brand, but for most companies advertising is done to increase sales and with the constant pestering of marketing to show ROI on there advertising campaigns the newer CPC style of marketing makes sense as it puts the onus of finding interested customers onto the advertiser and means the advertiser only pays for those who are interested in there message they want to convey.

I have been intently watching the evolution of advertising and in the past few years two search engine giants in particular that have two very different strategies, these being Google and Yahoo.

Over the past few years Google have been cashing in on there multi-billion dollar Adsense cash cow while Yahoo have sat back with there floundering display advertising model until it became too much and announced there very Google like Panama product  last year, which would force these rivals into a head to head match.

While the panama project I think was a necessary and good move for Yahoo they will not knock Google off there perch for quite a while due to Google’s huge customer base that was created due to it’s first mover advantage in evangelising the CPC model.

Google, intent to hold onto there crown as web advertising king acquired DoubleClick for $3.1bn recently, putting them right into the thick of Yahoo’s display advertising territory, with an already large customer base DoubleClick was a good acquisition to enter Google into this market.

Yahoo however have taken a different approach, already owning a significant portion of the display advertising market they have brought the fight to Google by acquiring Right Media for $680m, whilst the size of this acquisition is dwarfed by Google’s DoubleClick acquisition in monetary value they have it seem decided to out-innovate Google in revolutionizing this market by allowing customers to bid on the ad space they want in real time and awarding the space to the highest bidder, eliminating negotiating costs and allowing more revenues to be passed on to the company supplying the ad space.

I believe this is a particularly good move by Yahoo as it allows them to out pace Google in innovation in this sector and allow them to grow there own advertising brand organically whereas Google will have separate branding under both DoubleClick and themselves not to mention they saved themselves a mint!

Saying this though I do not doubt Google and there ability to capitalise in the online advertising industry, they will probably even have something similar to Right Media’s functionality in the coming months but Yahoo look to be keeping Google on there toes, maybe even taking there eyes off there Adsense goldmine just a little bit while Panama swoops in.

With all these acquisitions it’s an exciting time in the online advertising world indeed!

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