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Yahoo puts into place ambitious mobile advertising strategy

A senior Yahoo executive discussed the company?s mobile strategy in an exclusive interview with Mobile Marketer.

Yahoo?s mobile initiatives encompass the mobile Web, paid and ad-supported applications, as well as mobile search. The company is especially bullish about the prospects for mobile advertising for this year and beyond.

?Mobile advertising went mainstream in 2009?2009 a breakout year for mobile advertising, and I expect continued aggressive growth,? said David Katz, vice president of North America at Yahoo Mobile, Sunnyvale, CA. ?We and everybody else in the industry saw big jumps in revenue last year, but we still haven?t cracked the code on the right mobile ad units.

?For a long time we?ve been saying next year is the year of mobile advertising, but this year we?re saying last year was it, 2009 was the breakout year,? he said. ?What?s next is getting much more creative about mobile-specific advertising experiences.

?While we?re all starting to make a lot of money, mostly with experiences that look like PC Internet ads, that is going to change in the next 12-to-18 months as we take advantage of things like device location.?

Mr. Katz had a sit-down meeting with this writer at the International CTIA Wireless 2010 Conference last week in Las Vegas.

As a current example of Yahoo?s mobile strategy in action, quick-serve restaurant giant KFC and Southwest Airlines are driving college basketball fans to their respective mobile sites via banner ads within Yahoo Sports? ?Tourney Pick?em? mobile portal (see story).

?We?ve worked a lot on cross-platform buys?in fact, most of the RFPs that Yahoo sees now have mobile in them,? Mr. Katz said. ?Last year, our fantasy football app was completely cross-platform, with advertisers such as Subway, Toyota and Southwest Airlines taking advantage of mobile and online inventory.

?Similarly, with our recent Olympics mobile Web site, cross-platform was definitely a trend, and it?s something where we think we have a pretty big advantage because of the huge amount of traffic we see in both channels,? he said. ?We?ve integrated our sales force such that the people that sell PC advertising at Yahoo can also sell mobile advertising.

?We also have a mobile specialist force to help them do that, but online advertisers don?t have to talk to different people if they also want to buy mobile inventory.?

Search frenemies
Last month, Microsoft and Yahoo received clearance for their search agreement without restrictions from both the U.S. Department of Justice and the European Commission, and will now turn their attention to implementing the deal (see story).

?The deal with Microsoft involves them powering the back-end of our search portal, supplying us with the classic set of links,? Mr. Katz said. ?What we want to focus on is the user experience of search.

?Now that we don?t have to worry about core plumbing, we can focus on delivering fun, engaging, useful user experiences,? he said. ?These new apps are examples of the differentiation we think we will be able to deliver consistently.?

New search apps
At CTIA Wireless 2010 last week, Yahoo released two iPhone applications?Yahoo Sketch-a-Search and Yahoo Search?to make search more engaging for consumers while delivering relevant and powerful information (see story).

?Other search apps use GPS, city names or ZIP codes to describe location, but none of those are the way people actually tend to think about location,? Mr. Katz said. ?We launched the Sketch-a-Search local search experience that addressed that need by letting users narrow their search by tracing a circle with their finger on the iPhone?s touch-screen.

?Right now it is restaurants and hotels, but we will be adding more and more local information and rating information from Yahoo users that will integrate natively with the iPhone,? he said. ?Yahoo has been in the local business for quite some time, and we will be leveraging that content for both Sketch-a-Search and our mainline search app.

?Both apps are free, and we haven?t launched advertising in either yet, but we absolutely intend to over time?we?re extremely excited about mobile local search advertising, and we?re doing very well monetizing queries.?

Local mobile search
Local and mobile have a natural affinity.

?Local is going to be of huge importance for Yahoo,? Mr. Katz said. ?For Sketch-a-Search, we asked ourselves ?How do you look at local through the lens of mobile???

?Mobile search results should be actual stuff that you care about blocks away from you,? he said. ?There are a lot of opportunities to use location?it can be when you?re near a certain point, and there?s also a lot of opportunity pairing location with a time of day.

?We do some of that today, but with location information that isn?t very granular?we?ll continue to get more granular.?

While these new applications are currently only available for iPhone, Yahoo intends to release versions for other smartphone platforms as well.

?In 2009 most of our apps were for iPhone and BlackBerry, and in 2010 we?re adding Android to the mix?you should see Yahoo apps for Android fairly soon,? Mr. Katz said.

?Yahoo is platform agnostic?we go where our users go, and the proliferation of smartphone platforms is a good thing if it gets people using mobile Internet-enabled phones,? he said.

In addition to standard banner ads, Yahoo plans to monetize the applications with paid search listings, and over time, pay-per-call ads, local promotions, coupons and other offers.

The company has also offered click-to-download-in-the-App-Store advertising for more than a year?banners that tie directly into Apple?s iTunes.

Yahoo also has integrated with and corresponding click-to-buy-movie-tickets banners.

Mobile video ad units are in development, although Yahoo has been running rich-media mobile ad units for almost a year.

?Advertisers love those rich-media ads, mostly expanding ad units, and mobile video is something there?s a lot of excitement around,? Mr. Katz said. ?We?ve added mobile video to the front page of our mobile Web site, and there?s been lots of excitement from advertisers.

?User adoption of mobile video, while accelerating, is still pretty nascent, and advertisers are eager to see those numbers grow,? he said. ?Advertisers, in general, are definitely looking for experiences that get the user involved and engaged with the content on the page without disrupting the experience.

?You?ll be seeing some new Yahoo rich-media ad units that are unique and innovative, but all of that stuff still emerging, and our first priority is getting the user experience right.?

While Yahoo?s bread-and-butter for mobile local search is national or multinational brands and retailers with bricks-and-mortar locations, Mr. Katz said that he eventually sees small businesses playing a bigger role.

?There is an opportunity for smaller merchants, but the challenge has always been bringing them into the system,? Mr. Katz said. ?One of the best ways to do that so far has been partnering with folks with local sales forces, and over time you may see self-service interfaces for local merchants.

?Uptake among SMBs for classic sponsored search has been mixed, as there?s the impression that it is still fairly complex for the average mom-and-pop shop, so it?s up to us to make it easier for them," he said.

?A challenge we need to address for all advertisers, large or small, is to present mobile search in a way that?s easy to buy?it can be hard for advertisers to specify all of the GPS locations they need to buy.?