Will Yahoo!’s Panama Knock King AdWords Off The PPC Mountain?
On Feb. 5, 2007, Yahoo! unveiled its new PPC model. Instead of ranking ads by bid amount, the popular search engine now ranks ads by bid amount and ad quality. But what does that mean?
According to Yahoo!’s Search Marketing Help, the search engine uses a link quality index determined by two things primarily:
1. The ad’s expected performance – which is determined by various relevance factors considered by Yahoo!’s ranking algorithms.
2. The ad’s historical performance – its click-through rate relative to its position on the page.
Our primary concern with this feature is the combination of these two factors together. The first factor is speculative. How will Yahoo! determine “expected performance?” What is it based on? “Various relevance factors considered by Yahoo!’s ranking algorithms” doesn’t tell us much, especially considering that we don’t know much about Yahoo!’s ranking algorithms. One thing we do know, though, and that is Yahoo!’s link popularity rules aren’t as strict as Google’s. That could influence PPC advertising rank if we’re reading this right.
The second factor is even more harrowing. History is interesting because if an ad has done well historically, meaning it has received a lot of click-throughs, then will it be given greater weight than a brand new ad even if the new ad does a better job at #1? It just may, based on this statement on the aforementioned page:
As impressions and clicks accumulate, your click-through rate becomes a stronger factor in calculating your quality index.
In other words, if your ad has been around longer and has been successful, then it stands a greater chance of being at the top of the PPC heap even if the bidder has a lower bid amount. That’s walking right in line with Google AdWords’ PPC policy. But will it work for Yahoo!? It probably will.
We’re not quite sure why Yahoo! wants to use this model. Maybe it thinks it will gain a competitive advantage by doing so. It could be that Yahoo! realizes that many small business owners, who traditionally have smaller budgets than large corporations, are not competing well at Google. Many of them as well could do much better at Yahoo! if the playing field was levelled, which Panama will likely do.
Savvy tech users are more likely to use Google for searches. But new Internet browsers and people who make infrequent searches are more likely to use Yahoo!, MSN or AOL. If Yahoo! can corner the market on businesses targeting those searchers then it could be a powerful force in the PPC, or search marketing, arena. Conceivably, it could do better than Google.
It remains to be seen whether Yahoo! Panama will be a force to be reckoned with, but we’re betting that it has plenty of potential to be. All it needs to do is compete and so far it hasn’t done that well.
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