Online Advertising Must Change, Says Former Yahoo Exec

ALEXANDRIA, Va. - The internet makes it easier to target consumers, but the ads served to online users need to become more engaging, according to a pair of former Yahoo (NASDAQ: YHOO) executives who spoke at the Predictive Analytics World conference this week.

Former Yahoo Chief Data Officer Usama Fayyad, now CEO of Open Insights and soon to become chief scientist at Adknowledge, said behavioral targeting and predictive analytics was "pure profit" for Yahoo.

By tracking factors like a user's sites visited, their searches and location, sites like Yahoo can "guess intent based on behavior" and display an ad that the user is more likely to click, he said.

But there's a catch - those ads need to become more engaging, according to Nick Besbeas, former senior vice president of marketing at Yahoo.

Despite the interactive nature of the internet, Besbeas said people still find TV ads to be more engaging. He said digital media "requires a new ad type," and he offered a few examples, such as Tipp-Ex's YouTube ad that lets users decide what a hunter does with a bear to market the company's error correction products, and an Apple iPod Touch ad on Yahoo Games.

Microsoft's Aziza: BI and Analytics Changing Business

Bruno Aziza, Microsoft's worldwide strategy lead for Business Intelligence, noted a number of ways that business intelligence and analytics are changing the way companies operate and helping them anticipate user's needs.

He cited the example of a Bing airline ticket purchasing service that can predict fares and let users know when it's a good time to buy, and Clalit HMO is using analytics to predict what patients will need next.

Aziza stressed social media, calling it "the digitization of the water cooler conversation," bringing to light "things we would have ignored before because they weren't put into systems."

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