The New Yahoo Search (aka, Panama) Looking More & More Like Google Adwords
Yahoo previously announced that Bid Amount and Ad Quality will determine an ad’s rank in search results beginning February 5, 2007 in the U.S.
The days of FREE MARKET PAID SEARCH, which was pioneered by GoTo.com in the late nineties, are over.
No more bid jamming.
No more don’t jam me.
No more bid shadowing.
No more bid surfing.
In short, no more bid wars! Transparency in paid search is gone and has been replaced by blackbox algorithms.
Most of us that live, die, and breath search-engine marketing 24-7 will develop new strategies to give our clients a competitive edge. However, the days of basic automated bid management tools will be replaced by humans, along with some more advanced, logical next generation bid management and analytics tools. At Pepperjam, not only are we prepared, but we welcome the challenge. While I don’t love Yahoo’s paid search move into the realm of minimal to no transparency (because this gives way too much power to Yahoo [and Google] to control the market) I am confident that a new marketplace, defined by Return-on-Investment (ROI), instead of bid tactics (jamming, etc.) is a better marketplace for everyone long-term.
So what effect will Yahoo’s new “Ad Quality” score have on your cost-per-click (CPC) and ad position?
Let’s take a look at Google Adwords to help us answer that question. Ranking on Google has always included some form of ad quality – in Google’s early days the “ad quality” element was pretty straightforward limited to a CPC and a click-through-rate (CTR) component…The higher you were willing to pay, coupled with how may users clicked your ad (clicks / impressions) versus other ads in the same marketplace, determined your position and your relative CPC. However, most recently Google muddied the waters by introducing “Landing Page Quality” (LPQ) to the mix – this has resulted in some advertisers with “low landing page quality scores” arbitraily being charged as much as 20-30 times what another advertiser is charged with a higher landing page quality score – in short, for some advertisers Google’s LPQ score has been a nightmare – I’ve addressed this issue at multiple search-engine strategies conferences across the country (San Jose / Chicago) – my message for Google has been to provide more info on what constitutes good / bad / horrible landing pages and to address the false positives and collateral damage caused to many legitimate Google Adwords advertisers, especially affiliate marketers.
Yahoo’s new algo looks a lot like Google’s initial approach – it doesn’t appear to use “landing page quality.” Instead it focuses on CPC, along with “Ad Quality,” which I believe is pretty easy to control if you place more time into writing quality ads – I’ve provided some more info and some suggestions for how to maximize your new Yahoo Search Marketing accounts below – note that much of this info is available through the Yahoo Search website and contained in the most recent e-mail they set to advertisers.
By improving the quality of your ads and making them more relevant to users, you may be rewarded with a better ranking and/or a lower cost for your ads.
Note: The graphic above is provided for illustrative purposes only, and will not actually appear in your account (Yahoo e-mail / 02/02/07).
What is Ad quality according to Yahoo?
Ad quality is determined by:
- The ad’s historical performance – its click-through rate relative to competitors and normalized for position.
- The ad’s expected performance – determined by various relevance factors considered by Yahoo!’s ranking algorithms, relative to other ads displayed at the same time.
FYI: Yahoo reports that overall ad quality is displayed in graphical form by the quality index.
Yahoo makes several recommendations for how to take advantage of their new system, including the following tips:
- Include keywords in your ad.
- Use our Excluded Keyword feature to optimize your Advanced match type.
- Review your current bids and set a campaign budget to meet your business goals.
Let’s hold our breath together that Yahoo doesn’t follow Google’s lead and build an esoteric, blackbox Landing Page Quality Score or similar component to their otherwise managable ranking system. The truth is that the more non-transparent the system becomes, the more difficult it will be for small and medium advertisers to gain a competitive edge over the behemoth advertisers (Coke, Nike, Wal-Mart, Target, etc.) that control advertising rates and inventory in the offline media world.
For now, paid search-engine marketing provides the most cost-effective online marketing opportunity for businesses of all sizes to quickly capture market share and generate sales. However, the industry in general will be challenged by other forms of online marketing, such as behavioral marketing (re-targeting, shopping cart abandonment, etc.) and creative CPA types of sales / lead generation search-engines and networks.
What are your thoughts on Yahoo’s Panama? Like it? Loath it? Aren’t these guys starting to look a lot like Google Adwords?
February 2nd, 2007 at 1:29 pm
In general it is a move in the right direction but i feel for the wrong reason. I honestly feel reason Yahoo is doing it is to just follow google as a blind sheep since they have the market cornered. There are pluse and minuses both ways but overall i think Yahoo is just trying to follow and not lead and with that mentality even with these updates, I feel they won’t gain more market… honestly i feel they may lose market due to a lot of the people strictly using Yahoo because they can see their bid placement now they can’t and it will be more of a guessing game and not worth it to them when they can use other sources… i could be way off but thats my take.. I like the updates and do like the ability to get cheaper bids for quality ads/pages etc…… who knows maybe they will be more transparent then Google only time will tell.
February 2nd, 2007 at 1:56 pm
Excellent analysis. I tend to agree with you about the +’s and -’s, especially as it relates to well written ads equalling a lower CPC. My fear is that Yahoo will become more like Google who tends to be seen as the big brother – the almighty maker of all rules. This should be unacceptable to advertisers since the slogan of “do no evil” is an attachment to Google that most would agree no longer applies.
February 2nd, 2007 at 3:02 pm
I also agree that Yahoo is chasing Google in this area. Sure there were a few things wrong with the original platform of yahoo (like not being able to pause multiple accounts, and if you had alot to pause it could take 20-30 minutes. And in all seriousness, I loved bidding wars, jamming and all of that, it made it fun and unique and not only that it was also strategic. I guess the new platform is good in a functional way, but some of the trademark Yahoo uniqeuness is missing here and it is actually devoid of originality
February 4th, 2007 at 11:14 pm
If you own stock for Yahoo – please raise your hands and rejoice. Because investors will now cause a bull run to reward Yahoo for blindly following Google and taking the “evolution” … rather than “revolution path.
If you currently advertise on Yahoo – erm, you just lost your competitive advantage. The new publicity will bring hordes of advertisers to Panama (which will drive up the bid prices), and the new ad/site quality scores will make most of us start with a clean slate.
And if you were a search enthusiast, like Kris … I’m gonna be mourning this month. Every year, I grow more frustrated with Google for making its ad system so mystical. Hell, it’s “PAID SEARCH” … not natural search. We (the advertisers) are supposed to know the rules for placing well. If my local newspaper told me that they would randomly place my ad anywhere depending on the quality of my office space … I’d be frustrated as hell!
So yeah, tomorrow we can all start using Panama and figuring out the tips and tricks to gain the unfair advantage there. But today, let’s just bitch about the end of “The days of FREE MARKET PAID SEARCH” (In Kris’s words)
Great post, Kris.
February 19th, 2007 at 12:37 pm
[...] In many cases, Google is penalizing trademark owners from bidding cost effectively on their own trademark. In other cases Google is increasing bids as high as $10.00 for keywords that in the past cost advertisers pennies on the dollar. Previously, this issue has primarily hit search arbitragers. However, the problem continues to spread like a nasty virus unjustly hitting advertisers of all shapes and sizes, including some Pepperjam clients who spend lots and lots of money on Google Adwords. And with Yahoo Search Marketing starting to look more and more like Google Adwords, advertisers need to be concerned. [...]