Are You Ready for the New Yahoo?

Earlier this month, Yahoo! announced the largest revamp of its pay-per-click (PPC) ad platform since it bought the technology from Overture back in 2003. New interfaces, new analytical tools and new targeting capabilities will be rolled out to marketers, apparently during the third quarter of 2006. After that, at a yet-unannounced point in time, will come a whole new algorithm for delivering ads that factors in not just bid price but a “quality index”, much as Google does now.

So how will they affect advertisers, these innovations in a platform that serves almost one quarter of all the PPC ads on the Web? SearchLine discussed the coming changes with Mona Elesseily, Internet marketing specialist with online marketing firm Page Zero Media. She just spent 16 months studying search marketing techniques on the current Yahoo! platform and producing a guide on that subject, “The Yahoo Search Marketing Handbook”. So who better to assess the impact of the projected alterations?

“I’ve already started on a new version of the book,” she says. “The changes that they’re making will definitely require some explanation.

One important change, she says, will be the ability to link keywords into Google-like ad groups within a PPC campaign. The current Yahoo! system forces marketers to hitch individual keywords to one title, description and URL for each keyword. “Right now you need to assign an individual title, copy and URL for each keyword you bid on,” Elesseily says. “The change will move away from that, and we’ll be able to do everything by ad groups rather than at the keyword level. You’ll be able to designate ad copy for a group of keywords within the campaign, and that will let you do split-testing of ad text within the campaign.”

The current platform doesn’t allow for real split-testing: Marketers who want to test different landing pages to a keyword, for example, have to mount one page, keep it up for two weeks or a month, pull it down and try another one for the same length of time. “Testing sequentially is not as scientific as when you’re running both tests at the same time,” says Elesseily. “Running them concurrently gives you much better information.”

Tying down each keyword to a specific title, ad text and the rest, also makes setting up a PPC campaign on the existing Yahoo! platform pretty time-consuming. A small campaign can still take three hours to set up on Yahoo!; a large one involving thousands of keywords can require up to 40 hours to build. That might be the main driver behind the streamlined campaign interface planned for the new Yahoo! Search Marketing. “It’s quite time-consuming for marketers today, and I think they’ve taken that into consideration in launching these new changes,” Elesseily says.

And under the new system, pulling down an ad won’t mean losing the clickthrough data and other metrics from that ad, as happens right now on Yahoo! Marketers who run a special holiday-season PPC campaign and then pack it away in late December will be able to refer to those metrics when the next October rolls around, for a much-needed shot of historical perspective on their SEM efforts.

Some new analytical and forecasting tools in the revamped Yahoo! Search Marketing interface strike Elesseily as particularly useful to advertisers. For example, Yahoo! says it will show “assist” keywords—terms that users may have searched on in order to get to the term that led to their conversions. “That will give marketers an indication of how many and what kind of queries were made before that last term,” she says. “Someone could have come in on ‘Sony TV’ but ended up converting on a specific model number, perhaps having found it on that ‘Sony TV’ landing page. It will let marketers get into the heads of the users searching for them.” They will also be able to track “assists” across a range of ad media—not just search terms but banner and display ads as well—giving them insight into the entire marketing mix, not just the search component.

PPC advertisers on the new Yahoo! will also be able to use “share of clicks” forecasting. Set a bid for a keyword, and you’ll see an estimate of how many clicks you’ll receive on a given day at that price. And a graph will show how increasing the size of the bid can—on a theoretical level—improve the clickthrough performance of an ad.

“You should be better able to understand not only what the next dollar in a bid price will get you in terms of added clicks but what your optimum price is for the goals you want to achieve—where the maximum bang for your buck will be,” Elesseily says. “Say you’re working for a company, running your own SEM campaign, and your boss wants to know how much more you can get in clicks by increasing the search budget. Obviously, what a tool like this reveals is not a promise of actual performance, but at least you can get a general impression of what the impact should be of spending more on search. That’s not been possible in the past.”

Lisa Wehr, founder and CEO of online marketing firm OneUpWeb, says what she finds most interesting in the planned changes at Yahoo! is the promise of an accelerated mechanism for ad copy approval. The Yahoo! release promises “a streamlined content review process that allows advertisers to launch most new ad campaigns in less than 30 minutes.” That will remove a big pinch point for firms like hers. “When you’re managing hundreds of client accounts and literally hundreds of thousands of keywords, waiting for ad creative to make it through editorial is invariably a bottleneck,” she says. “So for search marketing firms, that should be a huge positive.”

All these interface tools should make their appearance in the third quarter of the year. The official Yahoo! announcement of the changes earlier this month was really a heads-up to search marketing firms and ad agencies, to give them the tools they would need to build their own software and integrate the new Yahoo! into their account-management systems. In other words, no one’s really put these features to a broad operational test yet, over a whole set of keyword campaigns.

And Yahoo! is purposely holding back on the next phase of its revamp, the introduction of the “quality index” that will play a part in determining which ads get served on a keyword. In its press release trumpeting the new platform, the company said this index “scores ads based on quality, bid and other relevance variables.” While Yahoo! isn’t offering details about the specific formulae it will use for producing this index, we do know that the clicks an ad has received in the past will be used as one measure of its appeal/utility to searchers. As with the Google Quality Score, the makeup of which is equally shrouded in uncertainty, the more clicks an ad has gotten in the past, the better it will rank. Other factors such as geography will also play a part in whether an ad is delivered for a given keyword, and bid price will still comprise one factor in the Yahoo! engine’s decision—just not the only one, as it does now.

Wehr is taking a strict wait-and-see attitude toward the impact of this new quality index on ad rankings. “Until we know that’s a good algorithm, I’m a little leery of it,” she says. “A lot of that stuff can be spoofed. I’m not particularly fond of Google’s Quality Score, so unless Yahoo’s done a better job of it, I think it’s too early to say whether it will be effective.” She does foresee that the index will give an advantage to big brands with a high audience-recognition factor, and that small companies may see some erosion in their PPC performance as a result.

Elesseily agrees that the real test will come when the Yahoo! quality index goes into action on real PPC ads. She expresses some surprise that there’s at least a chance this might happen as soon as the start of this year’s holiday shopping season. “I wouldn’t be surprised if that wound up being pushed back,” she says. “That’s a big change for advertisers to handle at a very crucial time. But Yahoo! has a history of setting deadlines and then extending them.”

One change that is not projected in the Yahoo! PPC platform—and something that Google doesn’t offer on a wide scale either—is greater visibility into the performance of PPC ads on the engine’s publisher networks, those collections of content Web sites where advertisers’ ads can appear in addition to search results pages. Wehr says she finds it “somewhat laughable” that none of the major engines offer visibility specifically into these pages.

“As much as they tout the way these tools will help fine-tune a campaign, none of the engines are yet letting advertisers choose where on their networks the ads are shown,” she says. “That’s where the click fraud problems lie, but everybody keeps sweeping it under the rug. Why can’t I see where my ads are performing best and where I’m being affected by click fraud? That will truly help me perform better as an advertiser.”

“No one’s denying that paid search works, but I think there’s a long way to go in developing the features that will truly help it work better,” she says.

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