Our arrangement with Yahoo!

From the New York Times today, written by Stephanie Clifford:

YAHOO plans to announce Friday that it has formed a partnership with the WPP Group, the advertising holding company, that will give WPP’s clients a broader swath of Web sites where they can aim their messages.

Under the deal, the thousands of Web publishers that use Yahoo’s advertising auction service to sell space on their sites will get more direct access to WPP’s clients. Those clients, in turn, will be able to funnel their messages to Web site visitors who might be particularly receptive, using technology from an ad-targeting division of WPP called 24/7 Real Media.

WPP’s clients will also benefit from the extra information the agency will be able to collect about the behavior and demographic profile of people who visit sites on the Yahoo auction service, which is called Right Media. Those details will enhance the database that GroupM, which is WPP’s flagship planning and buying agency, collects about customer behavior.

The deal is “about enabling WPP’s full range of agencies to buy digital display advertising across the entire Internet in a much more efficient way,” said Hilary Schneider, executive vice president for global partner solutions at Yahoo. The companies would not disclose the financial terms.

Although the deal is one of many similar partnerships that each side plans to make, it comes at a significant time for Yahoo. Having just rebuffed a takeover bid from Microsoft, the company now faces a proxy battle by Carl C. Icahn, the activist investor who is trying to strong-arm Yahoo into selling itself to Microsoft.

WPP’s chief executive, Martin Sorrell, said in an interview last week that he was disappointed that Microsoft and Yahoo had not reached an agreement.

“Anybody who is a customer in the marketplace likes to see balance in it,” Mr. Sorrell said. “No one likes oligopolies. Search in America is imbalanced. That’s what Yahoo and Microsoft offered, a bit more balance.”

Perhaps Mr. Sorrell and his company are looking forward to a day when WPP’s clients can enjoy the full fruit of not only Yahoo’s sites, but Microsoft’s as well. The idea of the partnership is to combine the technological expertise of 24/7 Real Media, which directs ads to relevant Web pages, with the broad reach of Yahoo’s Right Media advertising exchange.

The bigger the 24/7 network, the more likely it will detect users it recognizes, and will then be able to deliver specific ads to them. Then its sister agency, GroupM, will be able to collect more data about how viewers behave when they see an ad.

“Basically, the network gets smarter and smarter the more data points it gets added to it,” said Rob Norman, the chief executive of GroupM Interaction, which handles GroupM’s online buying. “We believe we’ll be able to do greater customization of campaigns.”

For example, say GroupM is working for a car company, and knows through its research that people who have visited the company’s site are likely to respond to a rebate offer for a car. People who visit the car company’s site are tagged with a cookie, or small piece of code, so that they can be identified by 24/7, which tracks the cookies, when they visit other sites.

Then, after GroupM bids for ads on Yahoo’s exchange on behalf of the car client, 24/7’s targeting technology can show the rebate ads to the appropriate users — people who have visited the car site in the past — as they surf different sites across the Real Media network.

WPP’s digital approach has been threefold. It is trying to add digital abilities to its existing companies, and investing in outside technology companies (GroupM, for example, recently took a minority stake in Invidi Technologies, which targets ads on cable and satellite television). Finally, it has acquired companies like 24/7 Real Media, for which it paid $649 million a year ago.

And WPP already has thought of ways it could work with services that compete with Yahoo’s Right Media — like Microsoft’s DrivePm advertising network.

”It’s not implausible that 24/7 could do a very similar project with DrivePm in the Microsoft world,” Mr. Norman of GroupM said. “Clients need to have access under the best possible circumstances to the best possible range of inventory in the marketplace.”

 

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