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Yahoo!'s AMP Goes to 11

If Yahoo! (Nasdaq: YHOO  ) is going to drown out the Microhoo noise, it's going to need a better amp. To be more precise, it's going to need an AMP, which is what Yahoo! is calling the enhanced display-advertising platform that the search-engine giant will roll out later this year.

Display online advertising is an area where Yahoo! has enjoyed an advantage over rival Google (Nasdaq: GOOG  ) , though that lead narrowed when Google was able to close on its deal to acquire DoubleClick earlier this year. That move, in turn, came just months after Microsoft (Nasdaq: MSFT  ) sealed the deal with former Rule Breakers pick aQuantive.

Display advertising, which consists of banners and rich media ads, is a fragmented sector. Several companies, including ValueClick (Nasdaq: VCLK  ) and Time Warner's (NYSE: TWX  ) AOL, are trying to monetize pages that aren't being effectively serviced through the text-based targeted ads that Google, Yahoo!, and Microsoft market.

AMP -- short for Advertising Management Platform -- will get a good trial run in the third quarter, when the new system is incorporated through the newspaper partners that have teamed up with Yahoo! to beef up local advertising efforts, according to this morning's Wall Street Journal.

A lot is riding on the AMP rollout, especially after the lukewarm reception to its Panama upgrade on the paid-search side. Panama was supposed to transform Yahoo!'s text-ad platform into a more Googlesque product.

Panama hasn't been a disaster, but it could have been better, given Yahoo!'s sluggish online advertising growth. The most telling statistic in the company's most recent quarterly report is that affiliate revenue -- the money that Yahoo! makes by pushing its ad inventory through third-party partners -- fell by 13% over the previous year's final quarter. That's a sharp contrast to the growth that Big G is seeing in its own Google AdSense program.

Then again, display advertising is an area in which Yahoo! takes pride in excelling. The consortium of hundreds of newspapers that have rallied around Yahoo!, as opposed to Google or rival employment-listings publisher Monster Worldwide (Nasdaq: MNST  ) , bears that out. No matter how the Microhoo volleys end, Yahoo! is justified in turning up the AMP.

Now we'll have to wait and see whether the market wants an encore or earplugs.

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