- The Washington Times - Monday, April 7, 2008

From combined dispatches

SAN FRANCISCO — Yahoo Inc. says it’s poised to revolutionize online advertising after years of being outmaneuvered by rival Google Inc.

But the slumping Internet pioneer might not get the chance to show off the latest improvements to its online advertising platform unless it can convince increasingly impatient investors that the new approach will produce a bigger payoff than Microsoft Corp.’s unsolicited offer to buy the Sunnyvale-based company for more than $40 billion.

Hoping to gain wiggle room, Yahoo is releasing more details about its effort to become a one-stop shop for selling and distributing online display ads — the Internet’s equivalent of billboards. Yahoo will begin promoting the upgrade today.

Microsoft, whose $44.6 billion offer was spurned, said Saturday that Yahoo risks a proxy battle and a lower bid if it fails to agree to terms in three weeks.

If the directors refuse to negotiate, Microsoft plans to nominate a board slate and take its case to investors, Chief Executive Steven Ballmer said. He suggested that the deal’s value might decline if Microsoft takes the bid directly to investors.

His stance may force Yahoo Chief Executive Jerry Yang to start discussions to avoid a fight with the world’s biggest software maker.

Yahoo’s advertising upgrade, called “Amp,” won’t be available until the summer, and then only on a limited basis among more than 600 newspaper publishers trying to recover some of the revenue that the Internet has siphoned from their print editions.

Nevertheless, Yahoo will pump up Amp with an online video demonstration of a system that the Sunnyvale-based company promises will make it easier for advertisers to aim their messages at specific demographic groups across scores of Web sites.

“This is a revolutionary approach that will allow marketers and publishers to deliver a more compelling experience for consumers,” said Hilary Schneider, Yahoo’s executive vice president of global partner solutions.

Amp will rely heavily on data that Yahoo collects about people’s preferences at its own Web site as well as other online destinations. The practice, known as “behavioral targeting,” has raised privacy concerns, but Yahoo — like rivals using similar tracking technology — thinks consumers will appreciate seeing more ads tailored to their individual interests.

Yahoo’s new platform will be competing against similar technology recently acquired by Google and Microsoft. Google bought DoubleClick Inc. for $3.2 billion primarily so it would have a better vehicle for selling display ads. The same objective drove Microsoft’s $6 billion purchase of aQuantive.

Amp didn’t cost Yahoo nearly so much. Besides relying on engineering developed by its own people, Amp draws on technology that Yahoo picked up by buying online ad service Right Media and Blue Lithium last year for a total of $781 million.