With its stock languishing below $35 for nearly 18 months now, the Internet giant is in the best position to capitalize on a rapidly growing trend in advertising called behavioral targeting.
Behaviorally targeted ads, which are "displayed to a selective audience whose interests or intentions are revealed by Web site tracking data," according to research firm eMarketer, accounted for $350 million in ad spending during 2006.
But that number is expected to grow almost 11-fold to $3.8 billion by 2011."Targeted advertising in display is the exploding market, compared with search-based advertising," Microsoft (MSFT - Get Report) chief advertising strategist Yusuf Mehdi told a conference of investors in May. But Yahoo! -- and not Microsoft -- has what it takes to dominate this field. Yahoo! runs the most visited network of Web sites in the world and is in a solid second place when it comes to search. That gives it plenty of expensive space in which to place ads on -- and lots of data about user behavior to better target those ads. It may also give the company a way out of a developing conundrum that contributed to the stock getting crushed after it reported