Peter Kafka

Recent Posts by Peter Kafka

Yahoo Gives “Retargeters” the Boot. Ad Networks Next?

More moves from Yahoo as it attempts to overhaul its flailing ad business: The Web giant has stopped doing business with “retargeting” companies who used to buy and resell its ads. And it may have similar plans for ad networks and other outsiders.

People familiar with Yahoo say that this week it told at least three retargeting companies — Criteo, TellApart, and ValueClick’s Dotomi — that it would stop selling them its “Class 2” remnant inventory, which the companies used to purchase on behalf of clients and essentially resell at a premium. The idea, theoretically, is that Yahoo will sell more of those ads itself.

The move follows the formation of an ad alliance between Yahoo, Microsoft and AOL, which is meant in part to decrease the amount of inventory those companies sell to third-party players like retargeters. Industry sources believe Yahoo’s U.S. team, led by Ross Levinsohn, intends to follow its retargeter ban by going after ad networks — a much larger group of outside players who buy and resell Yahoo’s inventory.

But so far Yahoo appears to be acting on its own when it comes to keeping its stuff away from outsiders. Neither AOL or Microsoft have made similar moves.

Yahoo declined to comment and I haven’t heard back from Criteo and ValueClick. TellApart CEO Josh McFarland offered this statement via email:

TellApart maintains a good working relationship with Yahoo, yet this approach to the ad marketplace would be increasingly opposite that of Google’s.

It was my team at Google that built the ecosystem around AdWords, and third parties fueled huge growth in search advertising revenue as a result. DoubleClick is now compounding that success with real time bidding and an open Ad Exchange, which offers full access to all owned properties and the Google Display Network. This approach stands in contrast to Yahoo’s.

Retargeters try to track Web users as they visit clients’ sites — usually retailers — and try to sell them related ads when they move to other properties. (Here’s an illustrated guide from Criteo about the process, though it doesn’t mention the part about Criteo buying ads on other properties).

They’re part of a larger trend in Web advertising that puts a greater value on who sees the ads, and pays less attention to where they see them — which has diminished the ability of Yahoo and other “premium” publishers to charge high prices for their inventory. Meanwhile, retargeters, ad networks and other outsiders have been able to buy cheap unsold inventory from Yahoo and others, and resell it at a premium.

The Yahoo-led coalition with AOL and Microsoft is meant in part to give those companies more control of their inventory, and eventually the ability to raise prices. And apparently Yahoo’s unilateral move this week is meant to do the same thing.

But there’s a fundamental catch-22 here: Reclaiming inventory will only work if Yahoo can sell it. And the reason that Yahoo was willing to hand it off to third-parties in the first place was because it couldn’t sell it.

Yahoo U.S. head Ross Levinsohn is trying upgrade his sales technology and staff with a variety of moves, including his recently announced deal to buy Interclick, though that deal won’t close for several months.


Latest Video

View all videos »

Search »

Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus