Monday, February 26, 2007

Is Panama Making Yahoo More Money? WebMama Logic...

Today's buzz about the Comscore report on Yahoo is telling the financial world that Yahoo's new ad ranking algorithm is increasing clicks to relevant (ie big spending) advertisers. This makes advertisers happy - especially when the cost for each of those clicks has dropped, which it has. So, if the advertisers' cost-per-click has dropped at the same time as the number of clicks has increased - is it a wash? Not quite. I think it is a win on Yahoo's side but only slightly right now. One thing needs to happen (or be shown to be happening) for Yahoo to truly need to make more money.
More money needs to be spent on Yahoo Search Ads.

This means an increasing in budget for advertisers. Relevant advertisers (ie - the ones that will show up at the top of the search results) will increase their budget for a few reasons:

1 - they preceive Yahoo results as being a better place to do branding and awareness advertising since they will be at the top, or closer to the top, of the results and in the company of their main competitors. This I believe will happen

2 - they are burning through their current budgets and have always wanted to buy more on Yahoo but couldn't get the search volume. This I believe will happen.

3 - agencies will recommend that clients spend some money testing Yahoo and agencies will be able to better optimize current campaigns in a timely manner. This will definitely be a win.

4 - conversions to sale increase and the new Yahoo adds to the advertisers bottom line. I am not so sure this will happen. When all is said and done the people who visit Yahoo and do a 'search' are still the same people and, presumably, will convert at the same rate which is substantial lower than Google conversion for the the same words at the same price. In the world where search is measured, to the micro-level, this may be the reason Panama does not increase Yahoo's bottom line. Then again, if #1, #2 and #3 happen .....

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posted by Barbara 'webmama' Coll @ 8:24 AM     Permanent Link