Despite its recent management shakedown, Yahoo takes advertising and behavioral targeting up a level today. Dubbed SmartAds, these creative deliver on a very old promise of the web: deliver the right product, to the right person, at the right time. The idea is to bring targeting into the ad itself as opposed to merely using demographics, geographics or any behavioral target as a parameter for serving the ad.

Essentially, this means that Yahoo! can, based on the info it has on me, serve me an ad that only I will see. Mass customization in action.

This is not new.

Direct Marketers have tried to make advertising personalized and as relevant as possible for years. Remember the Reason magazine covers with a photo of your house on it, warning that "they know where you are?".

In my early days as an online advertising professional, back in 99, I was sending out email newsletters that would promote, say, a travel offer. It was a time where we had a database of over 1 MM members. We had their first and last name, their wife's, kids, their zipcodes etc...The mailing would be dead simple: target the chicago area in February (rainy, cold, miserable) with a personalized message. The subject line would read:

Dear <insert first name>, take <insert wife's first name> and the kids to sunny Orlando?

The open rate, response rate and conversion we had were through the roof. And that was in 99. So yes, personalized advertising works. But what next?

We are reaching a point where scale is no longer an issue. Google, Yahoo! and all the big players have the ability to customize ads to death, for millions of users, in real time. It is a milestone. This widespread use of the technique means that users will feel empowered, as in - wow this is cool and will gradually overcome their fear of lack of privacy etc... Having ads calling you by name will almost become routine.

But at some point, users (you and I) will realize that the information used to target them so precisely is actually theirs. It's their attention data, behaviors, demographics, clickstream etc...and this will open the floor to new business models I have blogged about here previously: models that involve the user as a partner. Models that evolve from a publisher/ad serving centric model to a user centric model. Models that tell users: here's your cut.

Given that Google is commited to data interoperability (as in: Google lets you take your data to go to a competitor - see this Eric Schmidt interview, scroll way down), I would not be surprised if these models were appearing within the next 18 months. Watch this space.

UPDATE: I made a mistake on this one. Doug comments that this is done on purpose and properly documented by Google.

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Google changes its organic results (the ones on the left, not the paid ones), based on your search behavior. Screenshots below.

A friend of mine maintains developmentblogs.org and was checking his ranking on google on the query: "development blogs". He tells me he ranks 4. I go to google, check and cant find him. He then logs out of his google account, performs the search again and ta-da...his site is not even in the first 5 pages...

I am getting really amused by the tone of the Google blog. I blogged about this recently when the froogle announcement came out and they have done it again today.

If you read the gmail / gtalk announcement, it follows the same tone as the other product announcements: " I am an engineer, someone came and said: dude, why dont we merge gmail and gtalk? I said right on! so we worked real hard and stuff and here it is. Cool huh?"

Please. stop. the. BS.

The advertising business needs to stop playing dumb and educate consumers on the fundamental principles of online advertising. Users must know about every technology used, technique employed, every potential usage or resell of their data.

Why? because transparency builds trust.

Look at the cookie issue

For the average web user, cookies are evil little snitches that should be deleted regularly, like parasites. As we (people in the "industry") know, cookies can prove to be extremelly useful for both publishers, users and advertisers. Did anyone explain this to Joe Schmo? No. So he deletes all of his cookies regularly or installs adware removal tool that does not distinguishes between evil or good cookies. This creates a vicious circle that, in the long run, prevents relationships to be built. Even though reports conflict (Jupiter says 58%, Atlas says less (pdf)), all publishers, advertisers agree that cookies have a bad rep.

Sitepoint reports that amazon is getting ready to beta test an adsense-like program. Not to promote its own products but to actually feature third party advertisers.

For those unfamiliar with the concept, adsense is run by google and allows site owners to display advertising based on the content of their site and generate revenue each time one of these ads is clicked. It accounts for 42% of google's revenue, as per the latest filing.