SEM Industry - News and ViewsIn this post, Head of Digital Marketing, John Newton, explains why the launch of Yahoo! AdLabs is good news for those who want to push the boundaries of online marketing.

The granddaddy of online advertising, Yahoo!, have announced the launch of Yahoo! AdLabs, part of their established Labs scientific department that is responsible for driving many of the product developments within Yahoo!.

Yahoo! isn’t the only search engine/portal to have their own Lab (Google launched their Ad Innovations portal in March 2010, and Microsoft adCenter Labs was created back in January 2006 – although it hasn’t seen that many updates since 2008). Nevertheless, it’s always welcome when a major online superpower is prepared to put some of the revenue they earn from online advertising into driving the industry’s understanding forward.

First out of the gate from Yahoo! Adlabs is a study looking at the effectiveness of hyperlocal advertising on retail sales. Yahoo! clocked five-times return on ad spend for the advertisers within the trial, based on the uplift in sales at the retailers involved in the study – and 75% of those sales were instore (as opposed to online).

Radius to stores played a big part in the findings – return on ad spend was 4x spend for those within a five mile radius of stores in the survey, whereas people who lived within 2 miles of a store (and were exposed to the ads) generated 21x return on ad spend.

In many ways this isn’t surprising – think about the flood of mailshots for local supermarkets that have hit British doormats in recent years – they wouldn’t be doing it if it wasn’t working – and Google Maps has long been on the radar for all self-respecting search marketer. What may be more surprising to some is the scale of the gains available.

What Yahoo! haven’t quite made clear is what advertising platforms were used in this research. There is a clue in a Dec 2010 post on Yahoo!’s Yodel Anecdotal blog about how they are approaching Hyper Local through Yahoo! Local. Yahoo! Local offers mini-portals for specific neighbourhoods (yes, it’s just US focused for now) complete with local news, events and offers – check out the page for Sunnyvale (the location of Yahoo!’s head office). This includes the rollout of their Local Offers program, enabling local restaurants, spas and retailers to get their offers out to consumers. Launch partners included Groupon, CrowdSavings, Tippr and, which proves just how serious Yahoo! is about making this a success.

So, what else can we expect from Yahoo! AdLabs? Well, Yahoo! have revealed that their upcoming Yahoo! Labs Winter Science Week will include studies into contextual advertising and recall, how the online behaviour of friends can be used a predictor or your own behaviour (including buying), and new insight into the classic marketing obsessions of Reach and Frequency. Although the findings may not be revolutionary, the breadth of topics the Labs team are tackling is impressive.

What’s certain is that Yahoo! is determined to use the output from their Labs division to continue to assert their authority in the online advertising space.

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About the author:

John Newton has 14 years of strategic marketing experience across Online Display, Search Marketing and TV and Outdoor Advertising, in companies which include Yahoo!, ITV and TNS Global. John has written on blog monetisation for Web Designer magazine and was the editor of ClickThrough’s two books. John is a CIM Chartered Marketer.