Yahoo’s smart move — the future of its self-publishing network

Last week, Yahoo! Inc. divulged that it would be shutting down its self-servicing publisher network and redirecting this portion of its text-advertising customers to a targeted marketing company called Chitika Inc. (meaning “in a snap” in the South Indian language Telugu).

What was strange was how Yahoo went about releasing this information.  After an extensive search online, I found that there were no press releases or official documentation to confirm this change.  What I did find were several blogs and tech stories concerning the shift.  According to one article on PC World, Yahoo sent an e-mail last week to select publishers stating that Yahoo Publisher Network Beta would close as of April 30, 2010.

I tried to contact Yahoo about the decision, but got no response.  Chitika, however, was more than happy to talk to me.

Daniel Ruby, research director for Chitika, said he sees this less as a closing down for Yahoo and more of a chance for the company to “focus on their core competencies,” work with publishers they trust and continue to make a profit.  When asked, he said that he was not sure how the profit would split between Yahoo and Chitika.

He noted that with this change, publishers should not see a difference in their YPNO (Yahoo Publisher Network Online) service.  Advertisers, however, should see more value for their dollar due to Chitika’s targeting technology and research.

“The best I can describe it is we use search queries and basically our own internal research to try to predict whether somebody would click on an ad or not before we bother to show the ad, so we’re kind of almost a psychic ad network,” Ruby explained. “There are some flaws in our psychic predictions, but we are constantly doing research and developing new ways of predicting whether or not somebody will click on an ad.”

These targeting abilities are not what makes this move by Yahoo a smart one, though.  Chitika is smaller, currently employing only 35 people, and will be able to deliver the personal service and research that with Yahoo’s incredible size and scope, assuredly gets lost somewhere in the universe at times.

Denise Gaskell, Chicago small business owner and individual distributor of products for a company called Shaklee Corp., said“I think it’s a smart idea on their part, especially since Yahoo is very vast, so to be able to advertise targeted really makes sense.”

Gaskell markets over 300 products, so she said that sometimes it is difficult to get the word out effectively for one product line or a specific individual product.  She admitted that having never heard of Chitika before, she would have to do more research before she decided to invest in the company’s strategy.

Ruby also confessed that the average consumer (including myself) had not heard of Chitika before last week, and had this to say about the future of the growing company: “We don’t want to replace Google in terms of ads on a Web site. We want to complement Google. One of our big value propositions to publishers is that if you have two Google ad units and one Chitika ad unit, you’re going to make more money than if you had just three Google ad units.”

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