As 2007 starts, the impact of Yahoo's new ad platform, "Panama," is of great interest to the search industry. We getting some time for an interview with Diane Rinaldo, Yahoo Search Marketing's Senior Director for Retail. Hi, Diane! Thanks for describing what's happening at Yahoo Search these days. The new Yahoo platform -- "Panama" -- is pretty important for Yahoo and for the industry. Can you tell us how the migrations have been going? Our advertiser upgrades in the U.S. have been going very well. The transition process has been smooth, and we’re seeing the level of advertiser engagement with the new system that we’d hoped for. We expect all U.S. advertisers to complete their upgrade to the new system in Q1. So does DTC-XML go away by 2007 Q2? We'll retire DTC (Direct Traffic Center) as soon as advertiser migration to the new platform is complete in each market. Even then, customers will have access to historical data for 6 months post migration. For advertisers who have migrated -- what sort of feedback have you been getting? We’re getting a great deal of feedback from advertisers who have transitioned to the new system. So far, very positive. Many of the advertisers we’ve spoken to have been especially happy with our fast ad activation and new ad testing features, and the overall ease-of-use. As with any new software, we’ve heard about a few system bugs here and there, and we’re taking that feedback and addressing them as quickly as we can. We've been impressed your responsiveness (see Behind The Scenes At Yahoo's Panama Platform, 12/2/06). Can you give us a sense of how big an engineering effort the Panama platform was? Overall, Project Panama involved hundreds of Yahoo! employees across different offices worldwide devoting thousands of hours to making it a success. Very big. Yes, very big. For background, after the acquisition of Overture in October 2003, Yahoo! set forth to establish itself as a global leader in search and online advertising. First, we needed to start with the underlying technology – Web search – so we integrated the four acquired companies (Overture, Inktomi, AltaVista and AlltheWeb) into Yahoo! to launch our web search product in February 2004. Once that foundation was in place, we took the next step by re-engineering Yahoo!’s search marketing platform so it could not only maximize the advertising opportunities within our search properties, but also take advantage of all of Yahoo’s! assets. This re-engineering effort was really unparalleled in size and scope. We built a new system from the ground up while keeping our legacy system – which supports hundreds of thousands of advertisers worldwide – running at the same time. Not only was the underlying data platform constructed and tested, but a whole new advertiser interface was developed as well. In addition to building the new platform and interface, Yahoo! also built systems and processes to support the transition of advertisers from the old platform to the new one. We’ve taken the time necessary to build our new capabilities the right way. Can you share any additional functionality we might expect to see in the platform over 2007? When we set out to build our new platform, we knew that we had to build something that would be powerful and flexible enough to allow us to easily innovate upon it over the long term. While the initial version of the platform was designed to support the core system stability and speed and the advertiser features that we heard were most important, plans for future versions of the new platform could include introducing targeting capabilities, whether it’s by demographic, behavior or by combinations of these factors. In addition, the platform will be able to support all kinds of ad formats - from graphical to rich media – and many different kinds of distribution options, like cell phones or mp3 players. Rich media is interesting. Look at the attention Apple received yesterday at CES announcing I-Phone -- clear that sound, images, and video will receive more attention this year. Different topic: I'd like your views on the relationship between online advertising and store sales. I know you folks did some key research on this issue back in '04, and consumer web use has really increased since then. How should advertisers be thinking about channel interaction between search advertising and offline sales? Alan, as you know, study after study has shown that a large number of consumers conduct online research prior to making their purchases, and search is reported as the most common, trusted and relevant starting point. Because of this, retailers should provide the information search customers are looking for across many channels, allowing for the consumer to choose the channel in which they prefer to purchase. It’s important to give today’s multi-channel shopper the most up-to-date information available. To do this, retailers should keep promotions consistent across all channels, make buying easy with in-store pick-up options, and allow easy returns whenever possible. And a new marketing opportunity has emerged - online communities. These sites allow consumers to easily exchange advice and share their brand and product experiences. Although the often comes from complete strangers, shoppers trust the information like it was advice from friends and family, feel more secure in their purchase decisions as a result. A recent study from comScore and Yahoo! called “Engaging Advocates Through Search and Social Media” identified a particular group of people – we call them "Brand Advocates" - whose affinity for openly sharing their experiences online makes them of particular interest to marketers. A marketer’s challenge is to first identify and then effectively reach these important customers, since they give what is seen as “trusted advice” to other consumers. Through search, multi-channel retailers can engage these valuable Brand Advocates during the research cycle when their minds are open to influence. Additionally, retailers should enable consumers to share their opinions with their peers through reviews, email or instant messenger in order to facilitate the process. Say more. Are there particular strategies you'd suggest as "best-practice" for multichannel marketing? A recent study by Gartner Inc. found that multi-channel shoppers are more valuable because they spend more – but overall they're less loyal. Gartner claims this discrepancy is due to price sensitivity and higher expectations for customer service. However, we believe it’s also due to the Internet giving multi-channel shoppers a multitude of retailers to choose from that far exceeds the number of physical stores available to the offline-only shopper. So, to gain the loyalty of these multi-channel shoppers (and to turn them into "Brand Advocates"), retailers must employ a consistent approach across all channels. Not just consistency in pricing and inventory, but consistency in marketing messages, in customer service and in overall quality of experience. We believe that it’s important for marketers to maintain search strategy and messaging consistent with other channels -- think beyond just ‘close the deal’ tactics, not treating the consumer as just a direct response target. Retail marketers are moving beyond click-to-purchase metrics and are recognizing the multi-channel shopper’s desire for information, along with a buying cycle that includes multiple searches prior to purchase. Marketers who invest in the best analytics and bid tools tend to gain a better understanding of the searcher’s behavior and are therefore able to achieve multiple campaign objectives. Strategies may include bidding on both general terms (i.e. cashmere sweaters) and trademark terms, share of market goals, testing landing pages that include product reviews, or even applying offline conversion factors. Summing all that up: we’ve seen success from multi channel marketers who approach search from a customer perspective, employing the best tools to measure and manage their campaigns to multiple objectives. And we see enormous potential in creating a whole new breed of loyal customers who advocate for brands using social media. We agree. Marketers need strong tools for tracking and bidding which can distinguish between different objectives. Search campaigns for direct marketing should run differently than those designed for branding. In 2006, our agency saw more clients expanding their use of search from just the direct marketing perspective to include brand and store support. We believe we'll even see more in 2007. A New Year's question: if Yahoo Search Marketing were a person, what would be his or her 2007 New Year's Resolution? Great question! Hmmm... Yahoo-Search-Marketing-as-a-person's New Year's resolutions would be: (1) always innovate, and (2), never do the same thing more than two quarters in a row. And what’s a "something most folks don't know fact about Diane Rinaldo" you can share? I once thought I’d pursue a career in acting and studied at the American Academy of Dramatic Arts in NYC. The pinnacle of my short career was playing the part of Bilbo in a high school production of The Hobbit. :) Thanks, Diane, for graciously sharing your thoughts with us today.
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