Yahoo Counting on New Ad Tech as Woes Mount

The jots and turns throughout Yahoo’s past year paint a clear enough picture of a Web pioneer struggling to figure out its future.

Amid the spurning of the Microsoft deal, the Google partnership’s failure and CEO Jerry Yang’s impending resignation, Yahoo (NASDAQ: YHOO) has been experimenting with a number of initiatives to open its platform, improve its search results and branch out into new businesses.

Yet the company’s core model still revolves around advertising. And that doesn’t bode well, considering that in today’s frosty economy, ad revenues are down across the board.

But that didn’t stop Bill Wise, Yahoo’s vice president for business development, from talking up the company’s new ad platform today. Speaking at a panel discussion at a UBS investors conference today, Wise described Yahoo’s new APT platform as a ray of hope for display advertising — bringing simplified transactions, better metrics and greater efficiency to the space.

Still, amid all the recent turmoil, Wise couldn’t resist opening with a crack about the ceaseless rumors surrounding his company.

Speaking alongside a man who repeatedly appears on the shortlist of potential successors to Yang, Wise quipped, “When I found out Jon Miller was going to be here, I thought this might be my public interview.”

Jonathan Miller, a former CEO of AOL and partner at the VC firm Velocity Interactive Group, has been reportedly raising money in an attempt to buy the company.

Just what kind of company Miller, or whoever might take the helm, will inherit is a little less than clear.

“We’ve been talking a lot about Yahoo’s migration, first to a portal, then to a media network and most recently to a technology platform,” Wise said.

Those talks have often seen Yahoo describing its efforts to open up to developers, converging search and display advertising and establishing itself as the starting point for people’s Web experience.

But how those efforts will help Yahoo maintain — or grow — its standing in the online advertising sector remain equally uncertain.

Many of the panelists at the UBS event agreed that larger players like Yahoo and Google (NASDAQ: GOOG) are among the best positioned to weather the storm. Online advertising is a game of scale, and the recent swell of smaller ad networks and platforms is almost certainly going to be pared down, just as it was after the dotcom collapse at the beginning of the decade.

For Yahoo, growth means staking its hopes on the APT platform it launched earlier this year. The main thrust of APT is to revamp the way that display ads are sold, borrowing the auction model that Google applied so effectively to search advertising.

[cob:Special_Report]”We believe we can bring the search marketplace to the display business,” Wise said. “Display has pretty much been bought and sold through humans.”

Several analysts have recently noted that as marketers are forced to cut budgets, search ads are likely to be one of the more resilient forms of online advertising because their effectiveness is easier to measure. But Yahoo is hoping its APT platform will be able to bring some of the efficiencies and metrics that make search ads such a mainstay to the display side of the equation.

“APT is about trying to create the most vibrant marketplace for display advertising to really take the search dynamics and supply them to display,” Wise said.

For Yahoo, that might be an easier sell than for the myriad niche networks and platforms out there. As Miller noted, the search ad, which is sold on a cost-per-click basis so that marketers only pay when a consumer takes an action, is likely to remain in vogue through these stiff economic times.

“Experimentation is much harder now,” he said. “Performance-based advertising will be the dominant format for a while.”

Still, Wise sees Yahoo’s new platform, and the renewed corporate energy behind it, as a promising sign for the company that’s trying to recapture its past glory.

Wise came to Yahoo from Right Media Exchange, which Yahoo acquired in April 2007. In the time since, he said there has been a marked shift in Yahoo’s corporate culture as it has lurched through the Microsoft saga, seen numerous top executives resign and struggled to articulate its vision for the future.

“I’m excited because there’s a sense of urgency that didn’t exist when Yahoo first acquired us that does exist now,” he said.