Cracker of an Issue

Untangling the Web of Online Advertising and Privacy

Wednesday, August 10, 2005

Yahoo! - In search of the perfect online advertising solution?

On May 26, 2005, Yahoo's CEO, Terry Semel announced that developing ways to increase the amount of revenue Yahoo gains from Web-search queries was a top priority for the company in 2005 and that Yahoo had embarked on a large project to make better use of the huge stores of data it has about Web users to help advertisers better target their messages. Less than a month later, it was reported that Yahoo recently expanded its “Yahoo Impulse” program that targets banner ads based on recent search terms entered by a visitor on Yahoo’s sites. The change widened the window during which advertisers can drop targeted banners after a search term is entered from one hour to 48 hours.

Was this a minor upgrade to its ‘Impulse’ marketing product, intended to provide a boost to the targeting efforts of advertisers on Yahoo’s sites? Or is it part of a larger effort by Yahoo to make more profitable use of its user data, while expanding its search marketing offerings by merging the capabilities of personalized search, multi-site behavioral targeting, search-based advertising and contextual advertising? Why are privacy advocates not paying any attention to these developments? What’s next for Yahoo and how might it impact the future of online marketing and consumer privacy concerns?

Yahoo Impulse

The Yahoo Impulse Program is not something new. Yahoo has been using it since 2001 to trigger banner ads based on previous ad clicks and search queries. Further, back in 2002, Yahoo had considered deploying a program called Yahoo Impulse Mail, which would deliver targeted email ads based on what a user searched for. At that point, Yahoo defended privacy concerns by stating that user information would not be shared with third parties, would be used only in aggregate form and users would be able to opt-out by signing out of Yahoo. However, the proposed Impulse Mail program was never official announced by Yahoo and was ultimately never launched.

Yahoo’s new tweak to its Impulse program appears to merely widen the window during which a banner ad can be served, in response to a search term. However, this increase in the window essential means that Yahoo can now make better use of search data by capturing a user's query terms and categorizing them. For example, a user who searches for the term "credit card" will be tagged as someone who is interested in the broader "financial services" category. The user will then be served graphical ads, such as banner ads, from participating advertisers in that financial services category while he/she is in the network of Yahoo sites. The program expands the concept of search-based advertising, by adding a behavioral targeting component that has previously not been attempted by others in the space.

Yahoo Impulse and privacy

Yahoo Impulse tracks search behavior by using cookies and the upgrade to the Impulse program was implemented without making an changes to Yahoo’s existing Privacy Policy, probably because it already contains language that is broad enough to cover this new use of consumer data by Yahoo.

According to Yahoo’s Privacy Policy personal information is collected by Yahoo, from users when:

  • They register with Yahoo;
  • Use Yahoo! products or services (which includes every product and service provided by Yahoo, including Yahoo search);
  • Visit Yahoo! pages or the pages of certain Yahoo! Partners
    Enter promotions or sweepstakes; and
  • Automatically collected in Yahoo’s server logs from browsers, including a user’s IP address, Yahoo! cookie information, and the page requested.

Further, this information about its users may be combined with information obtained from business partners or other companies.

Yahoo uses this information to:

  • Customize the advertising and content users see;
  • Fulfill user requests for products and services;
  • Improve Yahoo’s services;
  • Contact users, conduct research;
  • Provide anonymous reporting for internal and external clients; and
  • Display targeted advertisements based on personal information.

Advertisers (including ad serving companies) may assume that people who interact with, view, or click on targeted ads meet the targeting criteria - for example, women ages 18-24 from a particular geographic area.

The privacy practices for Yahoo search are outlined separately and includes the following information:

  • When visitors conduct a search on a site that uses Yahoo! Search Technology, including Yahoo! and alltheweb.com, Yahoo keeps track of which search terms are popular.
  • Advertising shown to users may be related to the search term entered.
  • My Yahoo! Offers the option to save a list of favorite searches. Those are saved, edited, and accessed from a user’s My Yahoo! Page.

As noted above, Yahoo’s privacy policy is extremely broad and fails to address any specific consumer concerns that might arise with regards to the use of behavioral targeting or storing search history. The Policy does not mention the Impulse program, does not specify whether Yahoo associates search history with personal information it has regarding users and does not mention whether or not Yahoo builds detailed user profiles based on such combined information, which can be used to target advertising.


Although presently restricted to ads served on Yahoo’s sites, Yahoo’s new appreciation for understanding consumer search behavior could be a part of a larger effort that impacts its advertising offerings across the web. At present, the Privacy Policy seems unclear on whether search profiles or other behavioral data gathered by Yahoo can be combined with data provided by any of Yahoo’s business partners or other companies to deliver advertisements on third party sites. Based on the broad language in the policy regarding the use of information to customize or target advertising, it appears that Yahoo can do a lot more with its data, on Yahoo sites and on third party sites without violating the terms of its Privacy Policy (which all Yahoo’s registered users and visitors to Yahoo’s site are expected to be familiar with).

Yahoo’s next move: Search marketing and beyond

If recent reports are any indication of where Yahoo is headed next, use of consumer data is going to be at the forefront of Yahoo’s plans. Yahoo is obviously seeking to become a strong competitor to Google in the online advertising space. Launching their own search engine and the acquisition of Overture was just the beginning of Yahoo’s plans to reap the benefits of search marketing. Yahoo’s push to expand its advertising reach comes as the market for search advertising is taking off, and Yahoo is working hard at looking for new revenue sources as it seeks to transform itself into an online media conglomerate and beat Google in the web search game. If overtaking Google in this area is the intention, Yahoo will seek to leverage its two main advantages over Google - its original content and large database with information about millions of registered users. This intimate knowledge of its user base can prove very useful in serving ads with more precise targeting capabilities.

Yahoo currently has a contextual ad product (Overture ContentMatch) that operates a small network, showing text ads on a handful of non-Yahoo sites like ESPN.com, CNN.com, etc. It also recently launched the beta Yahoo Publisher Network self-service sign-up program for small and mid-sized publishers, as Google does with AdSense. Although currently limited to serving contextually relevant ads, Yahoo has also begun testing a pilot program with Revenue Science, where Yahoo’s cost-per-click text ads would be shown on web pages using behavioral data collected by Revenue Science. However, Revenue Science has not provided further information on the test or how Revenue Science collects the visitor data used to target the ads.


This begs the question: could Revenue Science be making use of Yahoo search data and delivering ads based on what someone has searched for at Yahoo over the past 48 hours? This concept of using search data is not new. AlmondNET has developed a program that delivers advertising following users across the Web dependent on what the user has searched for recently, including (but not limited to) search queries on Google and Yahoo. The company develops profiles of search activities by striking deals with ISPs and adware companies, to collect non-personally identifiable search behavior through cookies. The search data is then used by AlmondNET's Post-Search broker network, which buys low-priced run-of-site inventory from publishers, to display graphical ads tied to previous search behavior.

Yahoo could be attempting to go one step further, by integrating search queries and search-based behavioral data with post-search behavioral data gathered by Revenue Science to develop even more detailed behavior based profiles of users that can then be targeted on non-Yahoo publisher sites. Is that too far fetched? Probably not, because in 2004 Yahoo hired Dr. Usama Fayyad, a data mining pioneer as the company’s first Chief Data Officer and Senior Vice President of the Strategic Data Solutions group. Dr. Fayyad previously co-founded and served as CEO of digiMine Inc. (now Revenue Science) and his professional experience also includes five years spent leading the data mining and exploration group at Microsoft Research and building the data mining products for Microsoft's server division. Further, integral to Revenue Science Audience Search service is search-based targeted advertising, which enables an advertiser to select words that are interesting to its target audience, track the web visitors who have recently visited web pages that contain these interest-based terms, and group the visitors into audience segments. Why leave user queries and behavior on a search engine behind, when users start browsing from search engine results pages? By integrating Yahoo’s search data with post-search behavior, one can target even more effectively. However, if Yahoo combines search data with data gathered by Revenue Science from other publisher sites, they might be entering uncharted territory that will undoubtedly raise the eyebrows of privacy advocates.


If the above plans are true, Yahoo would include this “search advertising meets behavioral targeting” product to the Yahoo Publisher Network, in addition to the existing context based “ContentMatch” program and thereby establish the ultimate online advertising program that incorporates search terms and history, user behavior and contextual placements. Eventually, Yahoo’s Search Marketing product suite could look like this:

  • Sponsored search: Triggered by search terms on Yahoo Search

Yahoo Publisher Network

  • ContentMatch: Contextual graphical and text based ads on the Yahoo Publisher Network (includes large publishers and self-serve sign-up for small and mid-sized publishers)
  • Search + behavioral targeted ads: Uses data gathered through search terms and profiles and web browsing behavior to serve graphical and text based ads on the Yahoo Publisher Network (includes large publishers and self-serve sign-up for small and mid-sized publishers)

Further, imagine the possibilities if Yahoo ties up the ‘Search + Behavioral targeting’ product with an adware company…

A privacy firestorm in the making?

Even if the specific speculations outlined above are far from the truth; as Yahoo expands in the online advertising space and builds further partnerships in an effort to extract further value from the data it gathers, its online profiling capabilities are bound to increase. Eventually, Yahoo will draw the attention of privacy advocates and consumer awareness of Yahoo’s data mining capabilities is likely to spread. Determining whether Yahoo will turn into the next privacy target largely depends on how far Yahoo is willing to go to use data to generate revenue via advertising, how long it plan to retain consumer data, including for what purposes and what role will personal information of millions of registered Yahoo users and its new personalization services play in attracting advertisers.

Yahoo has long been regarded as a brand and company that consumer’s trust. A recent report issued by Internet Monitoring Company, Envisional confirms this, as the report listed Yahoo among not only the most prominent brands online, but also one of the most positively regarded brands. However, efforts to establish trust can be undone quickly and Yahoo must recognize that privacy issues and its business expansion that hinges on use of consumer data are not at odds but go hand in hand. Effective privacy management can help foster consumer trust and can eventually increase profitability. However, a failure to display a strong commitment to addressing privacy concerns from the product development stage, along with adequate consumer education on the value proposition of these new endeavors could erode consumer trust in Yahoo as a company and brand, and turn Yahoo’s perfect advertising solution into a public relations nightmare.