Net More Than an Ad Medium, Yahoo Executive Says

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SEATTLE -- The future of Internet advertising is in the hands of traditional brands, according to S. Murray Gaylord, vice president of marketing at Yahoo Inc.

In an address yesterday at the Direct Marketing Association's show, Gaylord said that 32 out of the Fortune 50 companies are now advertising on Yahoo and using its services.

"These are companies that are out there, they're experimenting, they're learning," he told a packed room of direct marketing executives at the Washington State Convention Center.

Marketers should look beyond click-through rates as the sole yardstick for online measurement, Gaylord said.

Yahoo combines communication, content and commerce to reach 180 million consumers, he said. It then collects data from this audience to glean consumer preferences.

Buzz plays a key role in Yahoo's evolution as an online service that does not simply source revenue from advertising. A new product called the Buzz Index measures the user's engagement with brands, products, people, technology and broad concepts.

Yahoo says 155 million users will be tracked, which the portal said would make it the largest market research panel in the world. The index will identify cultural trends; track and compare interest in the Yahoo client's brand with interest in competitors' brands; and measure the effectiveness of campaigns and e-commerce indicators.

A last-minute replacement for Greg Hawkins, recently resigned CEO of troubled Internet-only retailer Inc., Gaylord used Yahoo to illustrate how an online brand can survive in these skeptical times.

Two factors contributed to the dot-com failures last year and so far this year.

"One is, venture capitalists gave money to companies that had terrible business plans," he said. "These companies said their target audience is everyone in the U.S. Venture capitalists threw money at companies that just didn't get it.

"Two," Gaylord said, "the companies that had money weren't just marketers. A lot of companies are going under and have gone under, but the reality is that it's good for the business. It's fair to say that, as an industry, there was this powerful hype."

Gaylord likened the current state of Internet advertising to television in the 1950s. Production was crude, humor was bad and lighting was poor.

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