Yahoo announced today the launch of three new targeting products for advertisers.

Two of the products are for display advertising, and one if for the PPC channel.

The new products include:

• Search Retargeting, which gives advertisers the ability to target display advertising based on user search activities;

• Enhanced Retargeting, which allows advertisers to deliver dynamically generated display ads across the Yahoo! network based on user activity on an advertiser’s site; and

• Enhanced Targeting capabilities for search advertising, including ad scheduling and demographic targeting within search.

Search Retargeting for Display Advertising

Yahoo!’s Search Retargeting is a customized display targeting solution that lets advertisers capture user interest from search terms and retarget the user with display ads throughout the Yahoo! Network. For example, if a user searches for the keyword “sandals,” indicating strong purchase intent, an advertiser can target that user with a tailored display ad for footwear.

“We are always looking at new ways to maximize our ad spend while utilizing the most cost-effective solutions that convert users on the backend. By using Yahoo!’s Search Retargeting display product, we were able to achieve an effective cost per lead that was at the same level as our search backend goals and 50% lower than our regular display retargeting efforts, meaning that our display campaign was performing close to our search campaign,” said Rico de León, senior director of Media Services Operations, at University of Phoenix.

Enhanced Retargeting for Display Advertising

Yahoo! is also introducing Enhanced Retargeting, which combines standard site retargeting with dynamic ad generation. For example, users who visit an airline website to check offers for flights from SFO-JFK can be served a personalized offer for that specific flight when they visit a page within the Yahoo! Network. In a recent trial, a market-leading online travel company saw a 230% increase in total bookings and a 651% increase in click-through rate when comparing Enhanced Retargeting to their traditional retargeting campaign.

Enhanced Targeting Capabilities for Search Advertising

This is the new plan that will effect PPC ads:

Yahoo! Search Marketing will offer advertisers Enhanced Targeting capabilities for Sponsored Search and Content Match programs (expected to start in March). New features are designed to extend the advertiser’s control over where and when an ad is shown at both the campaign and ad group level, including what time of day and day of the week an advertiser would like campaigns to run (ad scheduling) and what age and gender they’d like to reach (demographic). Advertisers will be able to vary their bids for different segments in order to increase their ability to reach the desired audience.

The University of Phoenix began testing the product with Yahoo about a month ago. It bought graphical ads targeted to users who had searched for terms such as “online college.” Those users clicked on those ads 60% more often than users who saw ads that weren’t targeted to search data, said Rico de Leon,senior director of media-services operations at University of Phoenix.

“As the economy continues to put pressure on advertising budgets, marketers are looking for increased accountability for every dollar they spend. Yahoo new targeting products significantly improve the ability for search and display advertisers to reach their target audience, providing increased efficiency and accountability,” said Michael Walrath, senior vice president, Advertising Marketplaces Group, Yahoo.

Giving more control to advertisers should bring more business to Yahoo since it should benefit advertisers who can target those that receive PPC ads, however its effect on domain holders could go either way.

In previous changes to PPC programs where advertisers have been giving more control, like opting out of the domain channel or where pricing has been adjusted,, like in smart pricing, domain payouts went down.

However, the new rules might bring more advertisers into PPC and especially some coming over from Google which may increase the amount of PPC ads severed up at Yahoo.  The new changes will hopefully make advertisers ads more effective which can only strengthen the PPC market long term.

We will have to watch this closely after the launch of this product next month to see what effect these changes have on domainers bottom line.

Shareholders are certainly liking the announcement, as shares of Yahoo are up almost 7% in pre-market trading this morning. Yahoo is trading at $12.77 up $.80 from last nights close on the news.