Internet media company Yahoo Inc. will offer its marketing clients tools to create more personalized advertisements to Web users as it strives to build its share of graphical display advertising.

Yahoo is due to unveil on Monday a new system dubbed SmartAds that allows advertisers to compile ads on the spot based on a Web user's Internet profile, including such data as their location, recent product searches and, in some cases, age or household income.

It starts to marry the concept of targeting ... with the construction of the ad, Todd Teresi, Yahoo's senior vice president of display marketplaces, told Reuters.

The aim, he said, is for consumers to view advertising to be as relevant as the content they're looking at.

Internet advertising companies have built up technologies to better identify consumers visiting specific Web sites and serve them ads that directly relate to what they may want to purchase.

One such method is behavioral targeting, which tracks the sites a user has visited online and suggests products to them based on their stated interests.

The market for such targeted ads is expected to nearly double to $1 billion in 2008 from this year, and surge to $3.8 billion by 2011, according to research firm eMarketer.

SmartAds takes such targeting methods a step further, allowing advertising agencies to create a template for ads with several variables, then compile those elements on the spot to suit a specific reader.

For example, a Web user who has shown an interest in certain car models and who logged on from a computer in Los Angeles could receive an ad for that vehicle that combines information on their nearest dealership and a real-time feed of inventory levels, Teresi said.

Yahoo's bigger rival in Web search, Google Inc., also aims to compete for display advertising dollars.

Last week, Yahoo said it would merge its display and Web search advertising businesses to address client requests for campaigns that combine both types of ads.

Yahoo will start to roll out the SmartAds system for travel-related clients, beginning with two leading airlines. The company aims to offer the system to up to four different advertising segments by the end of the year.

SmartAds will operate on Yahoo's network of Web sites as well as in its advertising partnerships with eBay Inc., major U.S. newspaper publishers and cable operator Comcast Corp..

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