June 12, 2008, 12:00 AM

New Yahoo service lets retailers deliver targeted online display ads

The service uses online versions of newspaper circulars hosted by ShopLocal to deliver targeted ads to consumers based on their online behavior. Click-through rates are more than twice as high as those for generic ads, Yahoo says.

Yahoo has launched a new program that delivers targeted display ads to online consumers from the web versions of retailers’ newspaper circulars.

Yahoo will deliver the ads through its SmartAds technology which gauges a web user’s interests by the sites they visit, search terms they use and ads they click on, says Steven Feuling, category development officer at Yahoo.

“Because we have such an understanding of user behavior I can know when someone is looking for a GPS versus someone who is looking for apparel or home furnishings,” he says. “Our technology allows us to bring them the kinds of products that they are looking for, increasing relevancy and performance.”

The content of the ads will come from the online versions of newspaper circulars ShopLocal hosts for the web sites of such major retail chains as Target, Best Buy and Home Depot. Yahoo would not identify the retailers using its circular advertising service, but says it has been tested by a handful of companies that are among the top 10 of U.S. chains.

Because ShopLocal hosts all the versions of a newspaper circular that a retailer issues in a given week, Yahoo can deliver to a web user from Miami offers that appear in the ad from Miami newspapers. That is important because the products and prices in that circular might be different from the ad that goes to newspaper readers in Seattle.

Yahoo has been testing the service with a small number of retailers since last fall. Click-through rates on ads have been two and a half to three times higher than on generic ads from retailers, Feuling says. And retailers are also seeing higher in-store sales from the targeted ads, based on surveys of consumer panels.

Yahoo, whose sites attract 140 million unique monthly visitors according to web measurement firm comScore, plans to expand the online circular program to more retailers in the coming months, Feuling says. Yahoo also has used its SmartAds technology to promote auto and travel companies.

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