Yahoo Plans Changes to Ad System
On Monday Yahoo! revealed long-awaited changes to its online advertising platform, which will be implemented in three phases. This comes in the face of waning hope that Yahoo! can keep up with Google’s online advertising prowess, and MSN’s recent adCenter launch.
The first phase of this implementation involves developing the core technologies and data system, which will alter the way advertisers bid for, and manage their keyword portfolios, and is nearly done. The second phase will begin in the third quarter and will comprise of disseminating their new ad campaign management platform and its early features to advertisers. Finally, the third phase will involve Yahoo! beginning the implementation of a quality-based ranking model, as opposed to its current model of ranking ads based on the amounts advertisers bid to have their ads displayed.
This last phase will address a long-standing problem for Yahoo!’s advertising woes. Their current model translates into the possibility of having ads that are not clicked on dominating a key position just because of the amount that advertisers bid. Consequently, Yahoo! has seen reduced advertising income, and has led to 30 to 50% less income resulting from each query conducted than Google, according to estimates by the Wall Street Journal.
To resolve this issue, part of their new advertising platform will involve a complete makeover to the way Yahoo! ranks the ads displayed in its search engine results pages. They will shift to more of a quality-based ranking model, which will basically mimic Google’s secret formula. This new model will take into account the click-through rate of advertisements as well as a few other unknown factors, which is more or less what Google has been doing.
Yahoo!’s VP of search and sponsored search, Tim Cadogan, said, “We went about it from the point of view of our constituents, the advertisers and the users who ultimately look at these advertisements.” He went on to say that Yahoo!’s new ad platform will “provide insight – not just reports” that will help advertisers to make their campaigns more significant and relevant. “It’s the difference between information and knowledge,” Cadogan said.
Cadogan also indicated that this refurbished ad system is designed to be the foundation of Yahoo!’s advertising business for at least the next five years. This overhaul is the first such change to Yahoo!’s ad platform since it used a system created by GoTo in the late 90’s. GoTo is now Overture and was acquired by Yahoo! two years ago.
Other key features of the changes include keyword grouping improvements, IP-based mapping (made possible by Yahoo!’s 2005 purchase of WhereonEarth) to support better geographical targeting, enhanced scheduling abilities, indirect conversion tracking, and the expression of other business goals including cost-per acquisition.
Advertisers using Yahoo!’s current ad system are required to associate a keyword with a single title or description and one landing page. The new platform will enable advertisers to use a number of ads for a single keyword, allowing them to rotate the various executions and display the ones that perform better, more often, than those that do not.
The scheduling improvements will allow marketers to run one ad or a group of ads during a particular time period and to pause these campaigns without losing their ad-ranking information, which is a resolution to one of the more bothersome restrictions that search engine marketers have long scorned.
The interface of Yahoo!’s new ad platform will also see changes. The control panel will be cleaner and the content review process will be made more efficient to allow advertisers to launch their campaigns quicker.
These plans were announced on Monday to give advertisers and technology partners time to prepare for the changes. The changes will be put into effect gradually as mentioned above, and will be rolled out country-by-country. The quality-based ranking model, part of the third and final phase of the implementation process, will be started in a country after advertisers in the market have become comfortable with the new features.
Just like Microsoft, Yahoo! plans to use this new platform and future enhancements to reach audiences through media that have been relatively untapped, including cell phones, video game systems, and televisions.
Sources:
http://www.clickz.com/news/article.php/3604356
http://msnbc.msn.com/id/12680845/
http://www.businessweek.com/ap/financialnews/
D8HFKKS03.htm?campaign_id=apn_home_down&chan=db
