Yahoo! Targets TV for Ad Gains

Deep Pockets

The most challenging customers, said Millard, are marketing powerhouses in the league of General Motors (GM Quote - Cramer on GM - Stock Picks), Procter & Gamble (PG Quote - Cramer on PG - Stock Picks) and IBM (IBM Quote - Cramer on IBM - Stock Picks). These marketers, she said, want the Internet medium to prove itself, are good at what they do and won't change what they do immediately. "You have a big, slow boat that you need to turn," she said.

As Millard said at last week's analyst day, the toughest industry for Yahoo! to penetrate has been consumer packaged goods. That's at least in part because, to use her example, one can't sell a tube of toothpaste over the Internet.

Telcos, on the other hand, have shifted a significant percentage of their ad spending from newspapers to the Internet, and entertainment companies have shifted from newspapers as well.

In fact, movie studios have discovered the value of advertising on the Yahoo! home page on Thursdays and Fridays, Millard said. "It is critical for box office," she said.

Interviewed alongside Millard, David Karnstedt -- general manager of Overture's business that targets its biggest advertisers -- reiterated Overture's focus on its 10,000 to 20,000 largest advertisers.

Asked about reports that Overture's average per-click charges -- that is, the price that advertisers pay when users click on their listing -- were higher than that of pay-per-click rival Google, Karnstedt didn't question the comparison. Instead, he talked about the price per click being only one element of pay-per-click advertising's value, along with factors such as the percentage of site visitors who are converted into customers. "It really comes down to the overall return," Karnstedt said.

Millard had her own outlook on the cost to advertise on Yahoo!. When one questioner mentioned Yahoo!'s raising prices, Millard replied, "We don't increase price. That's the market."

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