Despite its recent management shakedown, Yahoo takes advertising and behavioral targeting up a level today. Dubbed SmartAds, these creative deliver on a very old promise of the web: deliver the right product, to the right person, at the right time. The idea is to bring targeting into the ad itself as opposed to merely using demographics, geographics or any behavioral target as a parameter for serving the ad.

Essentially, this means that Yahoo! can, based on the info it has on me, serve me an ad that only I will see. Mass customization in action.

This is not new.

Direct Marketers have tried to make advertising personalized and as relevant as possible for years. Remember the Reason magazine covers with a photo of your house on it, warning that "they know where you are?".

In my early days as an online advertising professional, back in 99, I was sending out email newsletters that would promote, say, a travel offer. It was a time where we had a database of over 1 MM members. We had their first and last name, their wife's, kids, their zipcodes etc...The mailing would be dead simple: target the chicago area in February (rainy, cold, miserable) with a personalized message. The subject line would read:

Dear <insert first name>, take <insert wife's first name> and the kids to sunny Orlando?

The open rate, response rate and conversion we had were through the roof. And that was in 99. So yes, personalized advertising works. But what next?

We are reaching a point where scale is no longer an issue. Google, Yahoo! and all the big players have the ability to customize ads to death, for millions of users, in real time. It is a milestone. This widespread use of the technique means that users will feel empowered, as in - wow this is cool and will gradually overcome their fear of lack of privacy etc... Having ads calling you by name will almost become routine.

But at some point, users (you and I) will realize that the information used to target them so precisely is actually theirs. It's their attention data, behaviors, demographics, clickstream etc...and this will open the floor to new business models I have blogged about here previously: models that involve the user as a partner. Models that evolve from a publisher/ad serving centric model to a user centric model. Models that tell users: here's your cut.

Given that Google is commited to data interoperability (as in: Google lets you take your data to go to a competitor - see this Eric Schmidt interview, scroll way down), I would not be surprised if these models were appearing within the next 18 months. Watch this space.

Great post by Adam Ostrow detailing how Google owns his personomy: his contacts, what he reads, who reads him, his schedule and a whole lot more. The real question to me is: can Google, and others, continue to generate massive amounts of revenue without sharing it with us, the users? I say no. If Google does not do it, somebody will. That would be a company i'd love to start.

UPDATE: I made a mistake on this one. Doug comments that this is done on purpose and properly documented by Google.

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Google changes its organic results (the ones on the left, not the paid ones), based on your search behavior. Screenshots below.

A friend of mine maintains developmentblogs.org and was checking his ranking on google on the query: "development blogs". He tells me he ranks 4. I go to google, check and cant find him. He then logs out of his google account, performs the search again and ta-da...his site is not even in the first 5 pages...

Edgeio, the service created by Michael Arrington of techcrunch and others sent me a password to check it out. I did and i like the concept.

Basically, Edgeio allows bloggers who assign a tag to a blog post ("listing" is one of them) to have this post published one edgeio, along with potentially many others, thereby creating an ubber marketplace that aggregates, organizes and re-publish gazillions of listings from all around the web. 

I very much like the idea of writing my listing on my blog, without having to register or create an account and let technology find me a buyer, web-wide. This is directly in line with the concept of personomies in the sense that it enables me to find a buyer. Not e-bay or craigslist. Like Jarvis says, this model could be adopted by other services like google and yahoo answers, dating services, movie reviews.

With internet searches playing an increasingly important role in murder trials, with the Electronic Frontier Foundation calling for a boycott of Google's desktop, with cellular phone data being available online, with Yahoo! helping out censors and dictators jail dissidents... privacy and online identity have never been such a hot issue.

The advertising business needs to stop playing dumb and educate consumers on the fundamental principles of online advertising. Users must know about every technology used, technique employed, every potential usage or resell of their data.

Why? because transparency builds trust.

Look at the cookie issue

For the average web user, cookies are evil little snitches that should be deleted regularly, like parasites. As we (people in the "industry") know, cookies can prove to be extremelly useful for both publishers, users and advertisers. Did anyone explain this to Joe Schmo? No. So he deletes all of his cookies regularly or installs adware removal tool that does not distinguishes between evil or good cookies. This creates a vicious circle that, in the long run, prevents relationships to be built. Even though reports conflict (Jupiter says 58%, Atlas says less (pdf)), all publishers, advertisers agree that cookies have a bad rep.

Sitepoint reports that amazon is getting ready to beta test an adsense-like program. Not to promote its own products but to actually feature third party advertisers.

For those unfamiliar with the concept, adsense is run by google and allows site owners to display advertising based on the content of their site and generate revenue each time one of these ads is clicked. It accounts for 42% of google's revenue, as per the latest filing.

The Google Personalized search history feature is where it all comes together. After recently adding news searches (and news items clicked), well, it's froogle's turn!

Rejoice comparison shoppers who have a short term memory problem! 

The Google official blog says, in the always playful tone of the product manager that "just thought it would be a cool feature"
But one thing Froogle couldn't fix was my lack of a short term memory. That's one reason we recently integrated Froogle with Personalized Search. Now you can view and manage your history of Froogle searches and the products you've looked at, just as you already can do with Web Search, Image Search, and News.

"Sir, we need this information to serve you better / improve our services / send you special offers."

I am just trying to buy batteries. I dont want to give you my zip code.

But, when the day comes and I need to be served better, access an improved service or receive a special offer, there is no way for me to retroactively provide my data. No way for me to say: "here, this is my data, I am in the market for this, do your best, you have 2 hours".

Because today, I either give my data or I dont. But, like I just said, I dont want to give my data, I want to give access to my data. I want to scan my fingerprint and have my server send the data.

As of today, social networking is just the ability for me to discover products others liked, meet people who tagged the same items etc....Fairly straightforward.

In personomies, social networking is much more than this since it will help define your personomy's price.

For example, if it is established that I am directly connected (data courtesy of linked-in) to senior executives in the advertising industry, who themselves have expensive personomies, that these contacts are confirmed and ranked based on the number of interactions (emails, IMs, chats) over the past N days, you can be sure that my personomy's price will increase substantially.