Yahoo! Does! Adsense! In! Reverse!

Pleases Wall Street for a day

Yahoo! today ushered in advertising network deals with three major publishers - Forbes.com, Cars.com and Ziff Davis Media, to add a little sparkle to its Q3 earnings.

The deals represent an unusual twist on the way most advertising networks work e.g. Google or Google - which place bottom feeder ads to soak up the excess inventory of third party publishers. Yahoo! by contrast is offering its own inventory to give page-impression constrained publishers a way of fulfilling bigger campaigns than they could on their own site.

Yahoo! doesn't say how the gig will work out in practice, beyond the fact that affiliates can plunder the entire Yahoo! website to reach their audience targets. The exciting and dangerous way would be to track readers as they move from the publisher websites onto Yahoo! and serve them behaviourally targeted ads commanding premium prices. Exciting? That's the way to make the most money. Dangerous? The cookies would surely crumble into a data protection minefield.

You want Yahoo!'s results? Here's the company statement (PDF).

Now for the one minute version: sales were up 12 per cent to $1.768bn (Q3 06: $1.58bn), operating income fell 26 per cent to $150m (Q3 06: $202m), net income eased a little to $151m ($159m). In the analyst conference call, the company noted an uptick in display advertising and announced the nearly finished rollout of Panama, the new advertising system that is supposed to make Yahoo! compete better with Google. Something is working: the company today revealed it has replaced Google to sell ads on the WebMD health site.

Wall Street was pleased with today's performance, which edged analyst forecasts, marking the stock up 11 per cent on the day. ®