CEO: How Yahoo's Ad Server Is Different

Q&A: Jerry Yang on Apt, Company's New Online Ad-Serving Platform

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NEW YORK ( -- Yahoo made the most of Advertising Week by trotting out CEO Jerry Yang and "Mad Men" star Jon Hamm to announce the company's online ad-serving platform, which it has officially rolled out to two publishers in its newspaper consortium, the San Francisco Chronicle and the San Jose Mercury News. In an interview with Ad Age, Mr. Yang addressed how Yahoo plans to make money on Apt (the platform's third name in its short life), whether a rough economy will affect implementation and renewed talks of an AOL acquisition.
Apt debut: Jerry Yang (l.) and Jon Hamm.
Apt debut: Jerry Yang (l.) and Jon Hamm. Credit: Jeffrey Holmes

Ad Age: Do you see yourself going up against DoubleClick, which is, of course, the largest ad-serving player?

Mr. Yang: Ad serving and campaign-management stuff is similar, but I think what ... we have shown is this is more about a marketplace-creating, liquidity-creating tool. I don't know about new products coming out from DoubleClick or Google, but the current products for publishers [are] really just a piece of software that sits on your site and helps you plan your site. There's no real interconnectivity to other sites, no real liquidity.

We've created more of a web-service model. You can have Right Media Exchange manage your liquidity; there's discovery of pricing; and, most importantly, you have other sales forces selling inventory on other peoples' sites. This is a different way of doing business. Rather than just features and functionalities, it's the networking, the cross-selling of inventory, the pricing, the discovery and the exchange model underneath -- those are the big differentiators.

Ad Age: How does Yahoo make money off Apt?

Mr. Yang: We make money in a few ways. We put our inventory into Apt, and to the extent that Apt has more advertisers, more agencies, more publishers and their sales forces putting in advertiser demand or liquidity, Yahoo being a publisher will benefit from ads running on Yahoo. So that's the first thing.

The second thing is we have a great sales force. We have probably the No. 1 sales force on the internet. And we will not only sell Yahoo inventory, but we have partner inventory, and if they're running on Apt, our sales force will be able to get higher CPMs, and we'll get a higher split from a revenue-share standpoint.

The third element is other people's sales forces, like [Media News Group CEO] Dean Singleton's. They'll sell local ads at CPMs that are 10 times what we can get because we don't sell locally the way they do. So when they sell, they may sell Yahoo inventory through Apt, and we will get a cut of that.

Ad Age: How will the economy affect your implementation?

Mr. Yang: In a slower environment, it's a much better time to make training switches. A big part of what we have to do with newspapers is training the sales force to sell on the system. If you're in a very robust ad environment at newspapers, it's very hard to take people off of selling [print].

Ad Age: The Financial Times reported that the Yahoo board is looking to reopen discussions about acquiring AOL.

Mr. Yang: I haven't read it.

Ad Age: Wouldn't it wouldn't make sense for Yahoo to make such an acquisition?

Mr. Yang: To the extent there are opportunities to enhance our leadership and strategy, we have to look at them. ... But I will say these rumors with AOL have been out there for a long time, so there's nothing changed on that perspective. As people understand our strategy more and what we talked about today with Apt, people will see that, 'Hey, we see where Yahoo's going.' ... Advertisers are gravitating to the high-quality, high-reach category leaders, and right now Yahoo is still one of the places they go to, and they'll probably not go to other places first. That position is very important to us.
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