Yahoo's new ad system is designed to let marketers target prospective consumers not only by the search terms the people use, but also by their demographics, location and what they do on other areas of the Yahoo network, executives said.

The system, scheduled to launch in the U.S. in the third quarter, offers enhanced ease of use, advanced testing features, geo-targeting and automated analytics, Tim Cadogan, vice president of search, said during the company's analyst day in San Francisco on Wednesday.

"We're exposing more data about the quality of advertisers' listings than any other competitor," Cadogan said. The system "shows on a five-point scale how well an ad is performing," as well as which user queries indicate explicit or implied intent to shop, he added.

Yahoo faces stiff competition from Microsoft, which launched its new AdCenter system in the United States a few weeks ago, and Google, which has the largest share of the search ad market.

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