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Monday, September 22, 2008

Why Small Advertisers Should Fear the Google-Yahoo Ad Deal

Clearly, many publishers fear the Google-Yahoo ad deal. Many large advertisers oppose the deal. But what about small advertisers? Isn't Google a friend to small business? Perhaps. Based on an example Yahoo provided about how it will use Google advertising technology, though, I think the deal could hurt small business. From Search Engine Land:
As part of the press day presentation, Yahoo executive vice president Hilary Schneider showed how few ads Yahoo returned for a search on [red roses in birmingham alabama]. In contrast, Google's search results page was loaded with ads. By partnering with Google, Yahoo would thus be able to supplement its own ads with these additional ones that it lacked.

Sure, Yahoo had fewer ads. But that's not because it lacked advertisers that Google has. It's because Yahoo's ad targeting system is pretty lame.
Does the real difference between the success of Google AdWords and the failure of Yahoo Search Marketing come down to ad targeting technology? Is Google expanded broad matching really superior to Yahoo's advanced match, from the point of view of the advertiser? Let's see what Google says about the deal (emphasis mine):
Question: Will the Google-Yahoo! agreement raise ad prices?
Answer: Neither Google nor Yahoo! set ad prices. Ads are priced by an auction where an advertiser only bids what an ad is worth to them. Furthermore, ad price is only one part of the story. A more important measure for advertisers large and small is the return on investment of their advertising dollar. The Google-Yahoo! agreement will help advertisers convert more clicks into customers by showing more relevant ads on Yahoo!, giving advertisers a better return for every dollar they invest.
I'm not convinced that the deal will result in more *relevant* ads on Yahoo. Clearly, it will result in *more* ads on Yahoo, served by Google. Let's take the example Yahoo provided. A Yahoo search for [red roses in birmingham alabama] currently shows zero ads. That same search on Google shows ads, but most of them appear to be triggered by expanded broad matches:

broad match ads on Google

How relevant do those ads look to the original search query? Roses are flowers. Sure, but these ads all look pretty generic. These ads will work for the advertisers in this case because most florists carry roses. But, what if they had paused roses ads while out of stock? Google would take the liberty of taking their flowers ads and using them for roses queries. For more background on why Google's matching can hurt advertisers, read: Purple Flowers Are Not Pink Despite What Google Might Think.

Notice, too, that most of the ads in the above example appear to be from large advertisers - ProFlowers and 1-800-Flowers are not local florists. They are not small businesses. My concern is that small companies who have taken the time to purchase standard match keywords via Yahoo Search Marketing will find their targeted search results flooded with Google ads from less relevant matches from large companies with large budgets.

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Blogger e-Patient Dave said...

I'm presuming you've seen Hooking Google to the Evil Meter.

Until I found that, I hadn't heard that Schmidt's now "moderating" the company's famed policy. (I haven't checked out what he actually said.)

Wed Sep 24, 11:13:00 AM EDT  
Blogger Richard said...

Thanks for the link, Dave. Here's one for you - a new site launched by Google to help sell the ad deal:

Regarding Google's philosophy, I think it's peculiar that they still use the word "evil" on some of their corporate pages. Examples:

1) See #6 on the Google Our Philosophy page.

2) See #9 on the Google User Experience page.

Thu Sep 25, 01:44:00 PM EDT  

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