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Yahoo and Starcom Ink Exclusive Data, Content Deal

Deal Gives Starcom Access to Yahoo First-Party Data and Content Studio

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In a sign that Yahoo's relations with agencies are warming, the digital media giant has struck a year-long deal with Starcom that will give the Publicis Groupe media shop exclusive access to Yahoo's "first-party" data on its visitors as well as to its content studio.

"Yahoo sits on data based on all of its platforms," Starcom CEO Lisa Donohue said. "Our clients sit on data about their own consumers. So instead of hoping that consumers find content, let's use the data to create and push online video content out to consumers."

She explained that for a typical client program, Starcom might look at a combination of client data and Yahoo user data, which could include data from Yahoo mail or its editorial properties focused on areas such as sports and entertainment, to identify existing content or news that's resonating with specific audiences. Then, working with the Yahoo studio, the agency team would create original video content related to those topics, tweak it to incorporate a client message and distribute it to those targeted audiences across Yahoo channels. Someone be could be shown a pre-roll video ad on Yahoo or one of its partner sites for an insurance brand, for example, based on that person's recent search queries.

The deal marks the first time that Yahoo's search data has been used widely to inform which display or video ads should be run, said Yahoo senior VP and head of the Americas Ned Brody. He claimed Yahoo is "the only company able to link premium advertising opportunities like video with search terms. Not only what someone clicked upon, but what they searched for."

Ms. Donohue said the terms of the deal are similar to those of a commercial deal with a media property in which the agency pays for inventory, time, content or sponsorship. The difference now, Ms. Donohue said, is that the agency is "using data to make the content and sponsorships more effective and customized to the viewer."

The shop is beginning the program with a handful of clients, including Allstate, Kraft, Kellogg's, Hallmark and Beam.

For Yahoo the deal signals a thaw in agency relations. Through much of CEO Marissa Mayer's first year at the helm, agencies felt like they were being shut out from what has long been a high-priority web property for advertisers. Ms. Mayer had publicly said the company was bearing down on product development and that revenue would follow, but some media buyers felt not enough was being communicated about what that meant for advertisers.

"Ultimately it went up to [Marissa Mayer]," said Ms. Donohue of the latest deal. "She was a supporter of it. There's no question that in a new day and age with Yahoo they are absolutely coming to the table wanting to partner, collaborate and co-create."

Mr. Brody said the deal with Starcom is "the first big digital video partnership you have seen out of us in a while," but he added that Yahoo is planning other deals "around different pieces of our integrated ad offering" with agencies that may include but aren't limited to Starcom.

In addition to indicating to agencies that Yahoo is open for business, the deal with Starcom could also return some confidence in Yahoo's ad technologies. Yahoo had pitched agencies in late summer on upfront deals to automate their ad buys using Yahoo's ad tech, but a number of agencies balked at the multimillion-dollar commitments Yahoo sought because they didn't feel the company's dated ad tech would perform well enough to justify the investment. At the least, Starcom's deal could spur Yahoo to improve its ad tech and provide the revenue to do so. AOL made a similar pitch to agencies in securing the programmatic upfront deals announced in September.

For Starcom, it's a familiar partnership that resembles the deal between Starcom MediaVest Group – the media agency network that houses Starcom, MediaVest and Spark -- and Twitter. Both partnerships are less about securing price and inventory than they are about making the most of data, co-creating content and achieving scale.

YouTube also recently launched a formal content-creation program for agencies.

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