The meandering Internet portal is rolling out Rich Ads in Search, a product to help advertisers get noticed before the lucrative search engine audience. The ads are called "rich" because we're talking about rich media here. Sponsors will be able to insert graphical, interactive, and even video ads into Yahoo!'s query result pages.
Unfortunately, they're not called "rich" because they will make Yahoo! shareholders rich.
It's easy to see why Yahoo! is pumped.
"A small group of advertisers tested it in the fourth quarter of 2008 and saw click-through rates rise by as much as 25 percent," claims the Yahoo! blog introducing the new feature. "They've also seen improved brand exposure and conversion rates."
Increased clicks? Higher conversion rates? These are sweet metrics for a Web company that relies on delivering leads. Unfortunately, there are several reasons to hop off the Giddy Express before it pulls into Ho-Hum Station.
- The beauty of paid search is that even the smaller advertiser can peck out a few lines of copy and have an ad running on ideal keywords immediately. Many of these advertisers don't have the skills or the means to outsource the development of sticky display ads.
- The beta testers may have had solid initial results, but we all know how ad blindness kicks in after the novelty wears off. When's the last time you clicked on a banner ad?
- True to its name, the "Rich" sponsors may scare away the poor ones, fearing that local advertisers have an uphill battle to get noticed pitted against branded eye candy. They'll just flock to search engines that appear to have a more level playing field, like Google
(NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), or IAC's (NASDAQ:IACI)Ask.com.
- Display advertising itself hasn't been much of a life preserver. Just ask ValueClick
(NASDAQ:VCLK), trading for less than a third of its 52-week high.
- How about the user experience? If searchers know that their queries on Yahoo! will get bogged down with distracting graphical ads, won't they just take their searches elsewhere?
This does not mean that Yahoo! should stop trying. When you're a stagnant company, you have little to lose, especially with a new CEO at the helm.
Keep those feet moving, Yahoo! -- only next time, move them in the right direction.
Yahoo!'s tapping the snooze bar:
Longtime Fool contributor Rick Munarriz is a fan of Yahoo! and Microsoft, but not of bad weddings. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.