Yahoo! Hopes New Internet Survey Will Boost Advertising Revenue

New data will illuminate Yahoo! visitors' behavior at other sites.
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If someone sees an Internet bookstore's banner ad on Tuesday, what are the chances he or she will buy a bestseller on Thursday?

Yahoo!

(YHOO)

is trying to find out.

The Internet portal announced last week that it will set up a large-scale, yearlong Internet users survey, conducted by Internet audience measurement firm

NetRatings

(NTRT)

so it can get a better idea of the effectiveness of online advertising in general and pitches placed on Yahoo!'s site in particular.

Yahoo!, which has the widest audience of any set of Web sites in the world, is hoping that this customized market research will enable it to sell even more advertising to major clients than it does already through its flagship marketing program, which it sells to advertisers under the

Fusion Marketing

label. The company had revenue of $587 million in 1999 and nearly half that amount, $228 million, in the first quarter of 2000, driven by advertising and commerce that companies conduct on its site.

To gather information, NetRatings's

Nielsen//NetRatings

service plans to set up a special panel of 5,000 Internet users nationwide by the end of August. As with the 65,000 volunteers that Nielsen//NetRatings already monitors for its audience measurement service, the company will place special software on participants' computers that quietly monitors where they go online.

Unlike the Nielsen//NetRatings panel, which the research firm pretty much leaves alone, Yahoo! will also survey the users in its panel throughout the year to help learn about any effects online advertising might have on attitudes toward advertisers or purchasing behavior.

Tracking Behavior

Bruce MacEvoy, Yahoo!'s director of advertising research, says the researchers won't know the panel members' identities. But the company will have demographic information about the survey members, such as their age, sex and where they live. The company will also be able to track which of the 5,000 see individual advertisements, so Yahoo! hopes to be able to figure out which types of users are more likely to respond to certain ad campaigns. And Yahoo! also hopes to quantify how much an ad campaign changes the behavior of the people exposed to it compared with a control group that hasn't seen the advertising. Unlike the data Yahoo! already collects on its site, the panel will illuminate Yahoo! visitors' behavior when they visit other Internet sites.

"The depth and complexity of the information we can derive from this panel is unparalleled," MacEvoy says.

MacEvoy wouldn't discuss how much it will cost Yahoo! to set up and operate the research panel. But the cost is significant enough that the firm says it's asking major clients in the Fusion Marketing program -- which Yahoo! pitches as a way to find customers, build loyalty and turn them into buyers online -- to "sponsor" the effort in return for getting data of special interest to them.

More Money?

Will all these numbers that Yahoo! is collecting actually help the company sell more advertising? "Oh, yeah!" says MacEvoy. Yahoo! acts in a "consultative" manner, he says, to help its advertisers and merchant clients understand how to use advertising effectively on Yahoo! "With this kind of information," he says, "our consulting expertise will go way up."

Just how many dollars that will translate into -- for either Yahoo! or NetRatings -- is unclear. In a recent research note,

Banc of America Securities

analyst Christopher Hansen said he expected minimal near-term financial impact for either company. (B of A was a co-manager of NetRatings's IPO; it hasn't done recent Yahoo! underwriting.)

But it appears the numbers will get a good reception. "Anything that expands our knowledge in terms of how people use the Internet -- more importantly, how advertising will be perceived and responded to and used by the consumer -- is something that we're interested in," says Allen Banks, executive vice president, North American media director for the advertising firm

Saatchi & Saatchi

(SSA)

.

Banks compares Yahoo!'s initiative to research that

CNN

has brought to advertisers in an effort to convince them to advertise on cable and specifically

Turner

cable properties. (Turner, a

Time Warner

(TWX)

unit, operates CNN,

TNT

and

TBS

.) "Yahoo! is a leader. Promoting the Internet is in their best interests," he says.