Yahoo! Targets TV for Ad Gains

Wait until next year.

The advertising sales head of Internet powerhouse Yahoo! (YHOO Quote - Cramer on YHOO - Stock Picks) indicated Wednesday that Yahoo! could steal significant amounts of ad spending out of national advertisers' television budgets. But she suggested the shift wouldn't be significant until 2005.

"You are going to see shades of real tipping points" this year, Yahoo! Chief Sales Officer Wenda Harris Millard said at an investment conference Wednesday. "I think really it's a setup for '05."

On Wednesday, Yahoo!'s stock continued its strong advance of the past year, rising $1 to $28.61.

Creeping Ahead

Millard's comments, which she made in New York at Piper Jaffray's annual technology conference, spotlight the success that Yahoo! has had of late in Net advertising. The gains have come both in the branded advertising business on which Millard focused Wednesday, and the pay-per-click search marketing business that's the specialty of the Overture Services business Yahoo! acquired last year.

Thanks to online advertising sales, Yahoo! last month blew past Wall Street's earnings estimates for its first quarter. And last week, Yahoo! raised its guidance for operating cash flow margins, based in part on the company's ability to export its business internationally.

In a question-and-answer session at the conference, Millard characterized part of her staff's work as a long, slow effort to educate major advertisers about Internet advertising and to get them to change their spending habits.

Among the forces moving TV advertisers onto the Internet, said Millard, are the proliferation of broadband connections to the Internet and migration of males from age 18 to 34 -- in their media usage -- from television to the Internet.

TV advertisers, however, aren't shifting as quickly as are audiences, Millard suggested. "They live in a box," she said. "It's frightening to them; it's unnerving."

Helping Yahoo!, said Millard, was its focus, as well as the experience of its salesforce, which she said comprised "very sophisticated sellers." The advertising business, she noted, is still driven significantly by emotion and relationships; a staff that is experienced and trusted, she said, is a competitive advantage.

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