Yahoo’s ad technology is so far behind Google’s

Business,SEM by on November 19, 2006 at 10:27 pm

It has been a while since I’ve dug into PPC campaigns. I continue to be amazed by how far behind Yahoo actually is. Yahoo’s upcoming Panama launch (it isn’t GA yet), will really just bring Yahoo’s technology to a point where it is equivalent to Google’s circa 2002 (ok, maybe 2003).

Panama features that will help Yahoo catch up:

  • CPC*CTR ranking
  • Geotargeting (about time)
  • Immediate Ad activation
  • Automated Ad rotation and testing
  • Wildcard keyword insertion

Areas where Yahoo still lags:

  • Second order optimization: The simple CTR*PPC is only a rough approximation of how to maximize revenue on the search results. Google has invested substantially in optimizing this. Yahoo hasn’t.
  • Landing page quality: Google is focused on ensuring the overall consumer experience with search & ads is top-tier. They’re looking at the quality of landing pages to assess the experience.
  • Automated price thresholds. Google does a great job determining minimum thresholds for poor ads. They are able to algorithmically determine poor ads and ensure that the quality gets raised.
  • Keyword testing. Most advertisers don’t know that Google assesses keywords that are likely relevant to your ads and displays your ads on those keywords. This likely has a substantial boost on their revenue numbers.

I hope I’m wrong, but my general assessment is that Yahoo’s Panama will look similar on the surface, but much of the sophisticated, money-making plumbing will be absent. Advertisers, publishers and Yahoo will all suffer as a result.

I’m not at all surprised that Yahoo earns so much less per search than Google does. While Google focuses on integrating ads into the consumer experience, Yahoo plasters them over the screen. Not only is Yahoo lagging Google’s per-search performance, but they are trading customer goodwill for the near-term buck.


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