Yahoo restructures technology in bid to upstage Google

Internet search company Yahoo is set to go head to head with rival Google in a bid to win control of the multi-billion pound internet advertising market.
Search engine giant Google dominates advertising on the internet, a phenomenon which has exploded in recent years and is largely responsible for Google’s $129bn valuation. However Yahoo, which considers itself the main architect of internet advertising thanks to a software system called Overture, has long resented its rival’s dominance in this area.
Now however the firm has declared that it is determined to start a major battle with Google for domination of the market and has restructured its company for the ensuing struggle.
“Internet advertising was something that we built from scratch that others have subsequently copied,” said Stephen Taylor, Yahoo Search Marketing’s regional vice-president. “This is the number one battleground in the advertising space now.
“We are very clear as a business that online search marketing is at the top of our list of priorities.’
In the UK last year online advertising grew by a staggering 65.6% and generated revenues of £1,366.4m. This represents three quarters of the market for national newspapers; globally the market is worth $12.5bn.
The attraction of internet marketing to advertisers its ability to target adverts directly at the people who are likely to be interested in the products that advertising is selling.
For example, type wine into an internet search engine and a list of companies selling wine appears down the right hand side of the screen.
And if you pay more than other advertisers Google or Yahoo will put you at the top of the first search page.
Yahoo’s announcement earlier today (8th May, 2006) that it will restructure its entire operation to concentrate on the market is an acknowledgement by the company of the growing importance of the market.
According to Taylor, Yahoo is to focus completely on the internet advertising market by putting it at the heart of its search software – a change that will mean that Yahoo’s search and marketing system will work on mobile phones and handheld devices like Blackberrys as well as desktop computers and laptops in the future.
Yahoo will also attack areas of perceived weakness in Google’s own ‘Adwords’ system which can make it difficult for advertisers to track exactly what their adverts are doing.
The new Yahoo system will let an advertiser find out in exact detail not only how many people are clicking on an advert and how much they are paying for each click – but also provide them with more information on how to create and target their adverts. This is one of the so-called black arts of internet advertising – optimising – that at the moment is done manually.
“We are going to automate a lot of the optimisation so that people can concentrate on their adverts,” said Taylor.
According to Jonnie Kendall, an expert on adwords who runs a web site specialising in teaching people how to use adwords, the announcement by Yahoo was inevitable.
“This is a massively growing area. We teach people how to get the most from adwords from both companies. There are a lot of people out there who use Yahoo’s Overture to find out exactly what people are spending on a word search who combine that information with Google adwords.
“What Yahoo are doing is making it much easier to optimise their adverts – that means getting as many people as possible to click on them – what this will do is get more people to use internet advertising which makes sense.”