Tables have turned since the ousting of former Yahoo CEO Terry Semel, with Jerry Yang regaining control, companies have been bought, and Yahoo is again heading upward. One area still lacks however, advertising.

Yahoo has been slow to market with their online advertising solutions. Microsoft and especially Google still have them beat in this area. Is that about to change? Yahoo has developed some kind of patent pending "SmartAds". This new ad platform will allow marketers to deliver powerful and direct ads to a highly targeted audience. The new technology will automatically convert marketer's creative campaign elements with targeted offerings, and turn them into some kind of highly customized and relevant display ad. The SmartAds are powered by Yahoo's demographic and geographic targeting capabilities. So for example, if a user did a simple search for Pizza, and they had Santa Monica selected as their default location in Yahoo Weather, an appropriate ad would be put together and served based on what Yahoo has compiled on the user.

Yahoo has done their research, and believes this is what marketers want from online advertising. Can this new tailored approach that customizes marketing messages based on consumers help Yahoo in their quest to gain strength in the online advertising realm? Sounds very promising. Nobody wants untargeted ads appearing all the time, that just distracting. But display an ad that speaks directly to me and although scary, I might be enticed click it.

eBay sellers this week have discovered one of the first major results of the handshake between Yahoo! and eBay that happened back in May: targeted ads that appear (for now) only on search result pages that yield no items. Apparently, many of the sellers who complained to eBay had no prior knowledge these ads were being introduced, but eBay's North American president Bill Cobb stated in May that the ads would be for complementary products and services.

And therein lies the problem: sellers are finding that not only do the ads lead buyers away from searching and shopping at eBay, but they seem to do the exact opposite of what Mr. Cobb promised, offering products and services that are, in fact, competing.

An eBay spokesperson stated that these ads are currently in a testing phase, so the system that dictates which ads appear when and where is definitely still on the drawing board. If anything is to be learned from this development, however, it is probably this: eBay sellers, try to sell products that are easy to spell, otherwise your potential customers might be led somewhere else due to a missed letter and a well-targeted Yahoo! ad.

[via AdJab]

Windows Live Mail Desktop, the confusingly-named Microsoft app that will let you access e-mail from multiple sources including Hotmail, Gmail, and AOL, is getting contextual (targeted) advertising, according to ClickZ. The program, which is still in closed beta, utilizes integration with Microsoft's Active Search to display ads based on the content of your e-mail messages, much like similar ad model in Gmail that caused (and continues to cause) some controversey. Unlike in Gmail, Active Search actually displays search results from Windows Live Search relevant to the message you're reading, the top two of which are sponsored links. Privacy implications aside (I give Google the benefit of the doubt--I'm willing to do the same for Microsoft on a trial basis), having targeted search results next to my e-mails sounds useless to me, but maybe some users will disagree. You can turn off Active Search and the ads are replaced by standard non-targeted display ads, but I'm not sure which would be less obnoxious. For more about the feature, head over to the Windows Live Mail Desktop official blog.