How Digital Advertising Works

How Digital Advertising Works

Advertising is a fundamental part of the services we provide and enables us to make many of our consumer services available for free. In this page, we’ll walk you through how digital advertising works at Yahoo, the different players involved, and how we use your data to personalise your ads.

Here’s a brief summary of how advertising on our consumer services works, and some of the areas that we’re going to cover in this page:

  • When you visit the sites and apps we own and operate, you’ll almost always see ads. These ads come in many formats, including video, image-based (often called ‘display’ or ‘banner’ ads), and sponsored listings.
  • The ads that you see on our consumer services are sometimes served by us or our affiliates, but also by our advertising technology partners.
  • Most advertisers want to show users personalised ads because advertisers believe ads that are tailored to their users’ interests or behaviours are most effective. As a result, some of the ads you see will be personalised ads. However, we do show ads that are not tailored based on users’ interests, devices and location as well (often called ‘contextual’ ads).
  • You decide whether you want the ads that you see to be personalised for you. Some of our users prefer to see ads that are matched to their interests, devices and location. Others don’t - and that’s okay too! We give you the control to decide what works best for you.
  • You can manage how we and our partners use your data to personalise ads on our consumer services in your Privacy Controls.

The following steps describe the lifecycle of our interaction with you as a user, from the first time we interact with you, to the measurement and reporting of a personalised ad that we show you on our consumer services.

When you first visit one of our sites or apps, we ask you if you consent to the use of cookies for the purpose of personalised advertising. If we obtain your consent, we create a unique identifier and store it in a cookie in your internet browser.

For example, Jeff visits Yahoo Finance for the first time. We create the identifier ‘XYZ’ and store it in a cookie on Jeff’s browser.

If you then log in to your account, we also store a hash of your login credentials in the cookie.

Jeff then logs in to his Yahoo account -[Jeff's user name]@yahoo.co.uk-. We then store the hash ‘EFG’ in a cookie on Jeff’s browser.

On mobile apps and connected TV devices, a unique identifier already exists on the device (known as an “advertising ID”), and we retrieve it from the device and store it in our systems. These advertising IDs are logged in our systems along with related information, such as date and time, device type, operating system, and IP address.

Jeff uses the Yahoo Sports mobile app with the advertising ID 789. We will take note of Jeff’s advertising ID 789 in our systems, as well as the fact that he is visiting our sites from an iPhone 15, that his operating system is iOS 18.3.1 and the IP address is 123.45.67.89.

Over time, with your consent, we collect or infer information about your interests and activity across our sites and apps and we store it with your unique identifiers.

The different types of information that we collect and associate with your identifiers include:

  • Information you directly provide to us when you use our consumer services
    ​For example:
    • your gender identity and age
    • alternate contact information
  • Information from your c
    ​For example:
    • with your consent, information from your commercial emails and purchases with merchants over email when you use one of our email products.
  • Information based on your online activity
    ​For example:
    • previous searches you conducted
    • websites and apps that you visited
    • which ads or articles you saw and clicked on
  • Information about your device
    For example:
    • your device type, make, model, operating system type and device settings
    • network-specific data, like IP address
    • your precise and imprecise location data based on your IP address, GPS, Wi-Fi or Bluetooth signals, or as otherwise made available by your device
  • Information from linked devices
    • With your consent, we will link activity and interest data from other devices in your household or associated with your account
  • Information from others, including information available through various data providers
    For example:
    • demographic, device and interest data from our partners and third-party data providers through contractual agreements
    • data, such as name, email, age, phone number and gender identity, from social media platforms when you use your social media login to interact with us

Once we collect the data, we, with the help of our partners analyse it and convert it into interest categories. We then combine users with similar interest categories to group them together into buckets called ‘audiences’.

Since Jeff regularly checks the national football league fixture and results, we tag him with the interest category ‘professional football fan’.

Once we create an audience of users with a particular interest category, advertisers can purchase advertising inventory to place ads that will be shown to that audience. This purchase often takes place via an advertising exchange (see ‘An advertising auction’ below). Audiences are attractive to advertisers for different reasons, including the size of the audience, the specificity, and the accuracy of the interests.

An advertising auction

Online advertising typically works as a real-time auction. This online advertising auction is known as ‘Real-Time Bidding’ or ‘RTB’ as it takes place in real-time in ‘advertising exchanges’. Advertising exchanges are digital marketplaces operated by third parties where companies buy and sell advertising inventory.

  • The sellers are publishers, like Yahoo, that offer content to users through their websites, apps and connected TVs. Yahoo and other publishers come to the advertising exchange to sell ad space, known as advertising inventory, available on their websites, apps and connected TVs.
  • The buyers are advertisers and ad agencies that are looking to buy advertising inventory to place ads and show them to users.

Yahoo International participates in advertising exchanges operated by our partners as a seller.

In auctions, buyers and sellers share information with one another to allow buyers to understand what advertising space they’re buying and information about the device and user that an ad is delivered to. The information exchanged includes user identifiers, demographic information, website or app names, audiences (e.g. user is a professional football fan) and location information. Buyers bid on the advertising inventory and the advertising exchange selects a winner, based on the highest eligible bid. The winning bidder in each auction then shows the ad, called an advertising impression, on the publisher’s webpage, app, or connected TV.

For example, a ticket sales promoter in Dublin wants to advertise football tickets to nearby users on a Yahoo site or app.

When the ticket seller or its ad agency wins an auction, Jeff will see ads from the ticket seller when he visits his Yahoo Sports mobile app and when he goes to Yahoo Search because:

  • the current IP Address of Jeff’s device that he uses to visit the Yahoo Sports mobile app and Yahoo Search is associated with Dublin; and
  • we have included Jeff’s identifiers (cookie ID XYZ, hash EFG, and ID 789) in the ‘professional football fan’ interest category.

Yahoo may also sell advertising on its sites and apps without the involvement of an advertising exchange where Yahoo has direct relationships with advertisers and their agencies and can agree to run ads directly with those buyers.

Yahoo and its partners also measure the performance and effectiveness of ad campaigns on our sites and apps by tracking engagement with the ads. This engagement is typically measured in advertising impressions, ad clicks, and sales generated from the campaign (typically referred to as “conversion data”). This data is analysed over the life of the ad campaign and used to show our advertisers the value of running campaigns with us.

Continuing the above example, as the ticket seller’s campaign runs, the ticket seller wants to know how many ticket sales are due its campaign on Yahoo (versus other advertising sources.) To perform this study, Yahoo analyses data about the campaign’s ad impressions, clicks and ticket sales from the campaign. We then create reports showing aggregate campaign performance metrics by various user demographics.

Since Jeff was one of many users who saw and clicked the ticket seller’s ad, his data will be used in the campaign analysis but we do not share his personal data with the ticket seller.

As described in the previous section, personalised advertising is a technique that uses information about individuals’ online activity over time to determine which ads to show to them.

Other techniques that we implement include: frequency capping (which means limiting the number of times an ad is shown to a user), providing contextual ads, retargeting and audience matching.

In these cases, we also measure the performance and effectiveness of the ads as described in Step 5 above.

Contextual ads are ads that we show you on our sites and apps based on the context of your interaction with a site or app at the time we show you the ad.

Context will include things like the content of the page or type of mobile app that you are using, your device type, time of day, or metropolitan area where you are based.

For example, Ines visits a Yahoo Finance site from her mobile phone with an IP address of 192.0.2.0/24. We will show Ines an ad from a Dublin bank that is running an ad campaign with us because:

  • the current IP Address of Ines’s device that she uses to visit the Yahoo Finance website is associated with Dublin; and
  • the current webpage contains finance content

Advertising partners provide us and our vendors with personal data, such as a hashed email or phone number, to facilitate a ‘match process’. This match process is performed by matching the advertiser-provided data with data that we have on file. The match process helps us show ads to a select audience that the advertiser wants to reach and who might be interested in the advertiser’s products. Where matches are found, those users will be included in the advertising campaign promoting the advertiser’s products.

We perform the match process ourselves, or use vendors operating on our behalf. When we use vendors to assist us with audience matching, we make sure that they implement appropriate confidentiality and security measures to protect your data.

Some personalised ads are only based on a user’s previous isolated online activity. This practice is normally called ‘retargeting’.

For example, Ines visits an online fashion retailer that she regularly buys clothes from and views a particular jumper. The fashion retailer has Ines’ email address from previous purchases and has obtained her consent to use her data for personalised advertising purposes. It decides to run an advertising campaign to show her an ad for that specific jumper based on her previous interest, and uses audience matching (see above) to be able to target Ines on a Yahoo consumer service.

You have several controls about the ads that you see and also the way that we use your information to select which ads to show you.

These are your personalised advertising controls that govern how we use your data:

This control enables you to choose whether you want to see personalised ads from us or not. If you do not wish to see personalised ads from us, you will still see generic ads that may not be relevant to you. To manage whether our partners serve personalised ads to you on our Products visit the ‘Partners’ control.

This control enables you to choose whether you want to see personalised ads based on your search history. If you do not wish to see personalised ads based on your search history, we will continue to retain your search history to provide necessary support for internal operations such as security.

This control enables you to choose whether you want to see personalised ads based on your precise location data. When you disable this control, we still use your precise location data when you are using app or website features where location is necessary to provide the service. This control will not impact previous precise location data that we have converted to general location information.

This control enables you to choose whether you wish to see personalised ads based on your commercial emails. When you disable this control, we will continue to analyse your communications for other functions such as spam filtering and security.

Advertising technology partners participate in the IAB Transparency and Consent Framework which is an advertising framework that gives you control over how these partners use cookies and other technologies and process your data when you use our Products. You can tailor your settings by purpose or by individual partner.

You can withdraw your consent or change your choices at any time by clicking on the 'Privacy & cookie settings' or 'Privacy dashboard' links on our sites and apps.

Last updated May 2025

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