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Wednesday, January 24, 2007

Yahoo! Search Marketing Upgrade Downgrade

I received an email today from Yahoo! entitled "An Important Change to the Way Ads Are Ranked" which announced they're switching over to their Google-like ad ranking system on February 5, 2007. I think the upgrade is necessary for Yahoo! and for its advertisers, but there are two items from the email I don't like:
  1. "Standard match type ads will no longer receive priority placement over Advanced match type ads."
  2. Part of ad quality will be determined by: "The ad's expected performance – which is determined by various relevance factors considered by Yahoo!’s ranking algorithms, relative to other ads displayed at the same time."
Standard match type is similar to exact match on Google AdWords and Advanced match type is similar to broad match. I was hoping Yahoo! would differentiate itself from Google by retaining the priority for Standard match over Advanced match. I think that yielded more relevant results than Google. However, it probably resulted in less money for Yahoo! and the buzzword this week is monetization. Pity. If the new Yahoo! Search Marketing is, essentially, a Google AdWords clone, that'll be disappointing. Here's the relevant text from this Yahoo! Search Marketing upgrade help page:
What's changing is that ads of both match type distribution methods will now be displayed together (mixed) in search results. Formerly, all Standard (exact) match type ads were displayed first in results (from highest bid to lowest bid), then all Advanced match type bids were displayed (again, from highest bid to lowest bid).

Now, we've eliminated the priority ranking that Standard match type ads used to receive: In determining their relative position in search results, all Standard and Advanced match type ads that are relevant for a given search term will be equally judged by the combination of their bid amounts and ad quality. This may increase the competition on certain keywords for both types of ads, and could cause some advertisers to pay higher click charges and receive more traffic volume than they received under the old system.
This sounds good for Yahoo! but not necessarily good for its PPC advertisers. On the other hand, the ranking of ads by bid price and click quality does seem like a good move. However, this could have been accomplished in a two-tiered approach, ranking of Standard matches by bid plus quality and then Advanced matches by bid plus quality. It'll be interesting to see if the Yahoo! ads increase or decrease in relevance once the change goes into effect.

new yahoo ad ranking model
The other item I don't like is this notion that part of the ad quality will be determined by the ad's expected performance. To me, this indicates a lack of transparency. How is Yahoo! going to calculate expected performance? This is clearly out of the hands of the advertisers. Whereas in the old Overture PPC advertising system which was straight bidding, advertisers could control their ads with great precision, now they'll be subjected to the whims of Yahoo! algorithms. I don't like the sound of that. Do you?

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