What's Next for Yahoo!?

The practice of search engine marketing gets more complicated as each day passes. The unique demands of each advertiser in the space -- along with third-party agencies -- have to be met as the business of search evolves.

Yahoo is about to take another leap forward with a new release of its ad platform. While the interface hasn't seen a major overhaul in about two years, other providers like MSN have made great steps forward in how we think about and manage our search engine advertising initiatives.

The Yahoo methodology focuses on helping advertisers spend money more effectively, meet business goals, and provide insights that will allow meaningful action while providing a higher level of flexibility.

That's big talk for a big search site, so I asked Yahoo to allow me a sneak peak at its next evolution of online advertising.

Bold, flexible and targeted
The granddaddy of auction-based search engine advertising, Yahoo recognizes that search will continue to evolve beyond simply matching keywords to content. Any new ad platform will require a crystal ball component that allows for future scalability.

The new platform will be released in three levels. The first evolution is centered around new serving and data platforms and is nearing completion. The second, scheduled for release in the third quarter of 2006, focuses on making it easier to use and optimize campaigns while creating new advertiser experience.

Once the first two areas have shaken themselves out in terms of bugs, quirks and other unforeseen issues, the last stage of development will be the introduction of a new ranking model designed to encourage relevance.

Yahoo isn't saying much about the new ranking model but given the natural evolution of other types of search engine advertising platforms, we can expect a design that is earnings' report friendly while rewarding advertisers with a richer targeting experience.

Stop saying title and description!
The more immediate release is a new account management interface allowing for greater flexibility. Advertisers can "peel the onion" at various levels, i.e., managing at the keyword, brand, grouping or campaign level will become easier with a more intuitive graphic interface.

A new ad quality view will enable advertisers to make creative and keyword level decisions by rating each creative (formerly known as title and description) according to its relative performance in a handy visual reference representation.

There are two improvements to geographic targeting as well. On the front end, Yahoo offers a graphical representation in the ability to select geographically relevant areas for search listings. Yahoo's WhereonEarth acquisition provides power on the back end. That is to say, a plumber in Miami, Ohio can restrict unwanted clicks from Florida.

Fly on autopilot… or not
A new option allows an advertiser to auto optimize or manually optimize campaigns. Optimization can also be accomplished at the level of granularity you wish. This next generation tool allows for optimization using data from across the Yahoo network.

Another exciting feature is the "assist" category. Essentially, "assist" keywords will enable advertisers to assign a value to funnel keywords. For example, in order to achieve a purchase with the "iPod Nano" keyword, you need to be buying the keyword "MP3 player."

Using this knowledge base, advertisers can set weights for keywords and future tools will enable advertisers to assign value to funnel keywords.

Additional new features support multiple testing variations with automatic rotations and an alerts window that suggests solutions for potential problem areas. An advertiser can click into specific campaign management problem areas right from the alert.

Forecasting cool additions
Probably the most exciting area of improvement lies in the highly competitive arena of budgeting and forecasting tools. Several graphic tools allow for various aspects of budgeting and forecasting. For instance, advertisers can schedule the launch of seasonal campaigns like for Mother's Day and set budgets and timelines.

Advertisers will also be able to determine -- based on a Yahoo internal calculation -- what share of voice they can expect to achieve at each level of spending. There are also tools to help calculate click volume at various spending levels along with a means to view possible performance at each potential budget tier.

Since any publisher-provided share-of-voice calculation is highly controversial (think taking the car salesman at his word on mileage), the real challenge for advertisers will be accumulating data across an entire search initiative.

Speaking of thinking beyond the single provider mentality, it is worth mentioning that Yahoo set itself apart from other search providers by embracing developers in advance of the changes. Many advertisers rely upon third-party applications -- i.e., bid management tools -- to manage search engine advertising and Yahoo offered new specifications in advance to help them along.

Future developments
Yahoo plans further integration of rich media and other ad vehicles in future releases. Mobile phone platforms are being tested in Japan. Television applications along with mobile audio devices are also in the works. 

"One cannot survive with one pricing model," says John Kim, Yahoo's senior director, global product marketing. "The way advertisers think of the search model often lies in managing effective cost per acquisition but they also want to buy fixed and guaranteed inventory. We don't want the platform to be a container; we want it to match up business objectives with buying."

Overall, what impressed me most about the release of the new ad platform and planned future products was the strategic plan behind each roll-out. It appears methodical and relies heavily upon performance and advertiser feedback.

Of course, the mere existence of a plan is light years ahead of many other publishers in the space and those who would seek to advance the evolution of search and the online experience could take a page from Yahoo.