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Today Yahoo! announced quality-based pricing for clicks coming from distribution partners in the sponsored search and content match programs. Similar in intent and implementation to Google's "Smart Pricing," it will automatically discount a publisher's click revenue (and the amount the advertiser pays for that click) by "a certain percentage" based on traffic quality as measured by conversion rates and other factors.

This systematizes the same process that has taken place with interactive ads for years: advertisers run tests, find out which sites convert well, and reprice their offers when they re-order, lowballing the low quality publishers.

My take:

This is a much-needed initiative for Yahoo!. Although it will initially dampen revenue, it will put Yahoo's relationship with advertisers on a solid foundation, allowing for future growth. I've witnessed first hand the slow increase in the ROI graph on Google's content network, to the point where we now feel confident bidding on this inventory in almost every advertiser account (although still lower than we bid for search inventory, usually). Smart Pricing has been an important part of this picture, as blunt an instrument as it may seem to some publishers. It's worth noting that by taking away ill-gotten revenue from bad publishers, these networks can afford to pay out better to quality publishers.

This initiative will further cramp click arbitrageurs' style, though not all forms of arbitrage will be negatively impacted, because not all publishers are part of the same content network (did you know that?) so different rules might apply. That being said, these distribution partners that are classified as falling under "sponsored search" appear to be subject to the new quality-based pricing; however, nothing some select partners won't be whitelisted or made exempt from the policy.

One possible criticism of such policies (I called this an "actuarial" approach to content pricing when Google rolled it out 38 months ago) is that it's a way of blunting criticisms of fraud-prone distribution partners without actually offending the partner network by taking direct action. In other words, it's an abdication of past responsibility for click fraud in the network, while trying to quietly rectify the problem. A further indication of a gradual acceptance of responsibility for the quality of the partner network is in point 17 of the FAQ's: "Although we do not currently offer the ability for advertisers to opt-out of particular sources of traffic, this is a feature that we plan to begin offering later in 2007." Good thing, because for some partner traffic, as far as many advertisers are concerned, the only smart price is zero.

Labels: content targeting, contextual ads, yahoo search marketing, ysm

Posted by Andrew Goodman
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Friday, March 02, 2007

Yahoo has recently clarified that they'll be sticking with the $0.10 min bid in the U.S. and discontinuing grandfathered bids.

Which should make it surprising that they're dropping the minimum in the UK to 5p - except that 5p works out to roughly 10c. So it's about the same in both places.

Either way, most of the time these minimums don't matter. If your market is in any way competitive you'll soon be paying significantly more than this to stay visible, even if you're "lowballing."

It's interesting to notice that Peter Hershberg doesn't feel the need to couch this story as "under Panama". Peter's company does a lot of paid search. He understands that whether you call the platform Panama, Kumquat, Sasquatch, or Guantanamo, a minimum bid is a policy having nothing to do with the interface per se.

Labels: guantanamo, minimum bid, yahoo search marketing, ysm

Posted by Andrew Goodman
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Monday, February 05, 2007

Last week I attended the Yahoo Search Marketing launch event in downtown Toronto (held at Kai Lounge). It's intended to confirm to Canadian advertisers that yes, now you can use the full suite of search marketing tools to target just Canadian searchers; you can geotarget; and you can do all of this using the new Panama platform. This is now live with a full complement of support reps available to provide support and assistance. My company hasn't worked with a huge number of Canada-only campaigns in the past, but coincidentally demand for it is now picking up and questions about Yahoo are increasingly common now that companies are aware of it as a second option after AdWords. An example of a field where you pretty much won't be marketing "across the board" to the U.S. and Canada would be a highly regulated area like drug trials or pharmaceuticals. As another example, a major Canada-only ecommerce site I'm pitching right now will benefit immediately from the Yahoo rollout. Money will no longer be left on the table due to platform limitations. What were companies doing in the past? Well, nothing. You couldn't buy PPC just for Canada through Yahoo.

For those who are confused by this latest launch event - because it's the second time Yahoo has held a launch event for YSM in Toronto in the past few months - I think this latest was more of a "we're flipping the switch" reminder to a selection of businesses who are particularly plugged into the scene. The previous event was broader-based and intended to gain media attention and to introduce the local advertising community to a range of Yahoo execs.

Of course for oldtimers in the industry there was little new here, but the agency community and larger advertisers should take note that Yahoo consistently refers to the extensible nature of the Panama platform. Eventually (similar to Google's trajectory), you'll be able to bid on a range of media through the auction. That consolidation is healthy but it's going to be awhile before it reaches critical mass.

I'm not sure how accurate this is, but at a dinner following the event I was told that the Yahoo Canada team has grown to well over 100, currently all crammed into the Front Street office (though they're still on track to move to a more spacious location sometime this year). The team specifically devoted to search marketing is smaller, of course - Yahoo's a diversified company so that explains the "well over 100" number.

I haven't seen much coverage of this event, other than Sulemann Ahmed's brief overview. What Sulemann didn't cover was the door prizes. In keeping with the company's fun image they had a few giveaways for those who handed in business cards. After the first ho-hum drawing, all eyes were on the next prize: the video iPod. I apologized to the friend standing next to me, warning her that "I always win the door prizes at these things." The next thing you know, her name was being called as the owner of a new iPod! So much for me being evil. :)

The final door prize, dinner and Raptors tickets, was going to be a great way for me to treat some of my buddies, so I was really looking forward to winning that one. Unfortunately, Martin Byrne (Director of YSM Canada), the MC, called me over to do the drawing, so I was ruled out! A guy from Lavalife won it. I apologize for having trouble reading his name (small white print on a bright red business card). Or maybe this was because I still had my eyes shut from the random drawing process.

It is just good to see that due to an influx of full time Yahoo people in Toronto, there are more search-savvy people to discuss customer targeting with and to generally advance the cause. Some staff have been lured back from sojourns in the UK and continental Europe - call it Canada's brain gain. Yahoo plans a full slate of events to evangelize search to marketers in Canada, beginning with some introductory level academy type courses (by a third party company) at a very reasonable cost.

Labels: canada, panama, yahoo, yahoo search marketing, ysm

Posted by Andrew Goodman
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