How Yahoo! Plans to Be More Like Facebook and Google


Source: Yahoo!.

Yahoo! is making a bid to be more like Facebook and Google. The project is called "Stream Ads," and it's intended to bring more customized advertisements to every Yahoo! site.

In an August blog post by the advertising team, Yahoo! described Stream Ads as "a native ad format that matches the content and context of the page." Thus, every page will still have ads but they'll be more subtle, blended within each page's content feed.

What's more, Stream Ads are "optimized" to appear on smartphones, desktops, and tablets. No more creating separate campaigns for different platforms.

In a review published over the weekend, Kara Swisher at AllThingsD called the ads "robotic" and noted how the look and feel suggest "that computer algorithms are firmly in charge." OK, but is that really so bad? Let's consider what we know about Yahoo! generally and Stream Ads specifically.

First, Yahoo! knew it was getting an engineer who believes in unifying, algorithmically informed design when it hired CEO Marissa Mayer. Stream Ads were an all-but-inevitable outcome of her arrival in the corner office.

Second, look at the models. Facebook's News Feed ads may be annoying to some -- or, too often, irrelevant -- yet advertisers can't seem to get enough of them. Total ad revenue for Facebook soared 61% in the second quarter.

Why are advertisers bidding on Facebook's offerings? The law of large numbers. Anytime you advertise on a platform that reaches more than 1 billion users, especially a platform designed to help users find what they want, the odds increase that you'll reach qualified prospects. Stream Ads follow the same dynamic as Facebook, especially on the Yahoo! main page -- the world's fourth most visited site, according to Alexa.

Nor is Yahoo! just copying Facebook. Mayer is also borrowing from her old employer in optimizing Stream Ads for multiplatform use. The strategy is reminiscent of Google's AdWords Enhanced Campaigns, which forced marketers to stop thinking about which devices to target and start thinking about what their primary audiences might need.

Will advertisers bite? I've been impressed with what I've seen so far. On its main page, Yahoo! this morning pitched me offers to refinance home and credit cards for those with good credit. Hardly surprising for a financial writer such as myself.

Still, we're in the early stages and we need to see net ad revenue gains before we can judge Stream Ads a success. I think we'll begin to see the turnaround within two quarters. What do you think? Do you believe Mayer's strategy with Stream Ads will be a catalyst for Yahoo! stock? Leave a comment below to let us know your thoughts.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends Facebook, Google, and Yahoo!. The Motley Fool owns shares of Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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