The rapid progress of personalized advertising and the changing role of creative

Yahoo! has just announced a new product, SmartAds, that enables advertisers to create customized advertisements on-the-fly to be relevant to the individual viewer. As revealed in an article in the New York Times, the advertiser gives the visual and text components of the advertisement to Yahoo, as well as access to its inventory, so the advertisement can promote specific products relevant to the individual that are available from a local outlet, such as a car dealer or branch of a chain store. The targeting is based on Yahoo’s at-times deep information about its audience, which is a critical advantage in these kinds of initiatives. The ads are being launched with three major airlines and several travel aggregators.

While this is being branded “behavioral targeting”, that depends on the richness of the data that Yahoo! has available, and is largely limited to people’s online behaviors. However this initiative illustrates just one element of a powerful and long-term trend towards greater personalization of advertisements. The other day, in discussions with a large national advertising assocation, I talked about how online is changing the role of creatives in agencies. Moving beyond user-created advertising, the next phase will be creatives having to create campaigns that can be customized on-the-fly depending on who is viewing it, when, and it what circumstances. SmartAds is only integrating data into a given advertisement. Certainly what is new here is the breadth of data which is being used, and how this is being pulled together. However personalized advertising has a lot further to go, where the actual advertisement and creative is tweaked for the individual.

Our Future of Media Report 2007 will be released next week, shortly before the Future of Media Summit 2007, held simultaneously in Sydney and San Francisco. In the report we will include some frameworks on models of personalized advertising, drivers of the value of advertising, and how these can be applied in creating new media business models. Keep posted!