Yahoo’s New Search Advertising System
Yahoo today plans to unveil plans for their new Yahoo Search Marketing advertising system and search ad serving technology which is expected to benefit Yahoo’s earnings, advertiser return on investment & targeting and better sponsored results for the end user. Yahoo’s new system will replace the sponsored link auction model which has more or less been in place since Goto.com / Overture first introduced pay per click search advertising to the Internet.
The announcement of Yahoo’s new “Panama” Search Marketing system comes on the heels of the MSN adCenter launch and heightened Google earnings via the Google AdWords interface. MSN adCenter includes search keyword, demographic (man, woman.. etc.) and geographic targeting while Google AdWords offers search keyword, automated behavioral profiling and geographic targeting for their search & contextually targeted offerings. Yahoo’s new system is expected to challenge both Google and newcomer Microsoft’s systems.
Wall Street Journal adds that Yahoo’s new advertising system will also go way beyond traditional web search; “making it easier for advertisers to run sophisticated keyword ad campaigns, judge their effectiveness and to improve them. It also is built to, eventually, carry Yahoo’s keyword ads beyond personal computers to mobile devices and television and to allow the addition of graphics, video content and click-to-call capability in its ads.”
Yahoo, which serves more search engine advertising than Google, has experienced difficulty in increasing the amount of clicks and cost-per-click of their search advertising placements. The old Goto.com auction system allows for non-relevant advertisements to rank in the top 3 spots based on the amount they are willing to pay per click. Problem with this model is if those advertisers are just skimming by Yahoo’s quality control editors, the ads are being served and lot clicked upon. Google’s system uses a more developed criteria for ranking which goes beyond just the dollar amount and looks at copy relevancy, click thru percentage, and target site relevancy to the keyword.
For example, if a New York based auto dealer bids on the term “used cars” on Yahoo, includes in their text that they only serve NY, CT and NJ, bids $3.23 to be in the top position, and then creates horrible copy for the text ad space – they are going to hog up the #1 spot for a high paying, high clicked term – which will be ignored by most of the US and not clicked on as often due to the irrelevant copy. Yahoo loses money on the placement.
With the new system, even though the New York auto dealer is bidding the most, their ad may be served in a lower position due to the low click thru ratio and geo-specific market. Yahoo’s new Search Marketing technology should come more relevant advertisements across keyword searches and the Yahoo Network, leading to more clicks and in turn; more revenue.
The New York Times reports : Those clicks should immediately turn into a lot more cash for Yahoo. It will not say how much. But Jordan Rohan, an analyst for RBC Capital Markets, estimates that if the strategy works, Yahoo will increase search-advertising revenue at least 20 percent right away — about $125 million in the fourth quarter of this year and $600 million next year.
Yahoo Finance reports that Yahoo Search Marketing is expected to roll out their new “Panama” system beginning with an announcement on May 17th at their Annual Investors Meeting which will include changing of the backend admin for keyword bidding and analytics. Full roll out of the entire system for all advertisers is expected by the end of the summer or this fall.
Search Engine Journal will be running through the new Yahoo Search Marketing system late tonight, expect new updates and information on this story as the day progresses.