How Digital Advertising Works

Advertising is a fundamental part of the services we provide. Our advertising business and the ads that we and our partners show you allow us to provide you with many of our products and services 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 our advertising business, and some of the areas that we’re going to cover in this page.

  • When you visit our Products, 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 Products are sometimes provided by us, but also by our advertising technology partners. 
  • 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. 
  • We also provide ads to you on our partners’ websites, apps and connected TVs through our Services.
  • You can manage how we and our partners use your data to personalize ads on our Products and
  • Most advertisers want to show users personalised ads because advertisers believe ads that related to their users’ interests or behaviours are most effective. As a result, most of our advertising business focuses on showing personalised ads. However, we do show ads that aren’t based on users’ interests, devices and location as well (often called ‘contextual’ ads).

The following steps describe the lifecycle of our interaction with a user, from the first time we interact with him, to the measurement and reporting of a personalised ad that we show him on our Products or through our Services. 

Step 1 - Assigning a unique identifier to your device

When you first visit a website on the Yahoo Ad Network, 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] 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 8 Plus, that his operating system is iOS 13.3 and the IP address is

Step 2 - Collecting data

Over time, we collect or infer information about your interests and activity across the Yahoo Ad Network 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 Products
    For example:
    • your gender identity and age
    • alternate contact information
  • Information from your communications, photos and attachments
    For example:
    • with your consent, information from your interactions 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
    • 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
    • login 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
    • your name, address, and postcode from publicly available sources

Following our example, we know that Jeff’s cookie, associated with the hash EFG, visited an online music store and searched for the latest albums from a famous pop musician. Jeff then went to his Yahoo Sports mobile app, ID 789, and checked the fixture for the national football league’s upcoming matches.

Step 3 - Building interest profiles

Once we collect the data, we 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’.  We also tag him with the interest category ‘pop music enthusiast’ given his interest in pop artists.

Step 4 - Serving personalised ads

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 takes place in the 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-world auction. This online advertising auction is known as ‘Real-Time Bidding’ or ‘RTB’ and takes place in real-time in ‘advertising exchanges’. Advertising exchanges are digital marketplaces where companies buy and sell advertising inventory.

  • The sellers are publishers that offer content to users through their websites, apps and connected TVs. These publishers come to the advertising exchange to sell 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.

We operate advertising exchanges as both buyers and sellers, and we also participate as buyers and sellers in advertising exchanges operated by our partners.

In auctions, buyers and sellers share limited amounts of user information with one another to allow buyers to understand what they’re buying. The information exchanged includes user demographic information, website or app names, search terms and location information. Buyers bid on the advertising inventory until the advertising exchange selects a winner. The winning bidder in each auction then shows the ad, called an advertising impression, on the publisher’s webpage, app, or connected TV.

A ticket sales promoter in Dublin partners with Yahoo to advertise football tickets to nearby users on the Yahoo Ad Network.

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.

Jeff will also see the ticket seller’s ads from us when he visits a local newspaper website because we have a partnership with the local newspaper to show ads from our advertising partners on their site. In other words, that local newspaper website is part of the Yahoo Ad Network. 

Step 5 - Measuring ad performance and effectiveness

We measure the performance and effectiveness of ad campaigns 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. 

As the ticket seller’s campaign runs, the ticket seller wants to know how many ticket sales are due its campaign with Yahoo (versus other advertising sources.) To perform this study, Yahoo analyzes 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 his personal data will not be shared with the ticket seller.

Additional Advertising Practices

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, 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

Contextual ads are ads that we show you on the Yahoo Ad Network based on the context of your interaction with our Products or Services.

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 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


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 bookshop and views a particular novel. The bookseller decides to run an advertising campaign to show her an ad to buy that novel because she showed previous interest in the novel.

Similarly, Ines viewed vacation destinations on travel sites, it’s likely that she will then see airfare and hotel ads related to those destinations.

Audience Matching

Advertising partners provide us and our vendors with personal data, such as 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, and we do not share information about matched users with advertising partners. 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.

Your choices and controls

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 and our partners use your data across the Yahoo Ad Network:

  • Personalised advertising

By disabling this control, you will no longer see personalised ads from us, but we will still show you generic ads that may not be relevant to you. Our partners may also continue to serve personalised ads to you on our Products if you have not disabled these partners in the ‘Partners’ control.

  • Search history

By turning off your search history, we will not use your search history to personalise your ads. We will continue to retain your search history to provide necessary support for internal operations such as security.

  • Precise location

By disabling this control, we will no longer use your precise location data to show you personalised ads. We will 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.

  • Device linking

By disabling this control, activity and interest data collected on other devices that we associate with you or your household will not be used to personalise ads on your current device. Also, the activity on your current device will not be linked to other devices that we associate with you or your household for personalised advertising. Some linking between devices is necessary for critical functions such as security and fraud detection and prevention.

  • Yahoo across the web

By disabling this control, we will no longer provide personalised ads for you on partner sites and apps in the Yahoo Ad Network. We will continue to collect and use information from partner sites and apps for minimal operational needs such as billing, ad measurement and reporting.

  • Audience matching

By disabling this control, Yahoo will no longer use your personal data such as email or phone number for audience match purposes. You will therefore no longer see ads on the Yahoo Ad Network from advertising partners that target campaigns via the match process. 

  • Communications analysis

By disabling this control, we will no longer analyse the content and metadata of your communications (such as your emails) to personalise your ads. We will continue to analyse your communications to provide product features and other functions such as spam filtering and security.

  • Partners

You can manage which advertising technology partners have the right to collect and use your data, including their use of cookies and other technologies when you use our Products.  

Visit Your Privacy Controls to manage these controls. 

More information

Yahoo participates in multiple, regional self-regulatory bodies and is committed to adhering to their principles for online behavioural advertising. While distinct, these entities are all cooperatives of organisations committed to building responsible advertising policies across the Internet. 

Yahoo also participates several self-regulatory bodies:

Yahoo also participates several non-US self-regulatory bodies: