Yahoo!: The Quality Goes in, or the Price Goes Down
The publisher networks operated by the big search engines—and for that matter, most contextual networks owned by anyone—have gotten a reputation as somewhat murky environments where advertisers can’t be sure what sites are delivering their ads or how well those placements are performing. As a result, some marketers have shied away from advertising on Google’s AdSense network or the Yahoo! Publisher Network while contextual networks like Quigo Technologies that offer greater transparency are picking up business.
Earlier this month, Yahoo! announced that it would start setting up a direct link between the cost of placing a pay-per-click ad on publisher sites in its contextual network and the likelihood that those clicks will result in a conversion. Called “quality-based pricing”, the new system will discount the cost of clicks on sites that tend to convert less often—as determined by Yahoo! The advertiser will pay less, and both Yahoo! and the publisher will earn less from delivering the ad.
Quality-based pricing is part of the same search platform enhancement drive that resulted in the Panama platform, says Reggie Davis, Yahoo!’s recently appointed vice president of marketplace quality. “It’s part of a continuing enhancement of the overall quality of our network, really trying to drive value to our advertisers and our partners and good, relevant ads to our users,” he says.
The new quality discount will take in both Yahoo!’s Content Match program that delivers contextually relevant ads to publisher content sites and Sponsored Search, which offers Yahoo! search functions and PPC search ads to third-party sites. And Yahoo! says the policy won’t affect the way advertisers set bids for keywords: They’ll still stipulate a maximum bid which will not be exceeded. But in some cases, Yahoo!’s analysis will apply an automatic discount to the ad at the time of the click.
Advertisers will have to do some homework to see whether they’re getting those discounts, however, since Yahoo! won’t be offering any focused reporting on quality-based rebates. They will have to infer discounted traffic if they see their average cost per click drop off on the Yahoo! network; and they may be able to home in on the publisher sites that are being discounted by watching their reports and noticing differences in costs per click on specific keywords.
The new quality discounts are being phased in gradually, Davis says, starting with a few specific keyword families and eventually broadening to include most keywords on the network. Yahoo! hasn’t revealed any information about those first keywords liable to trigger the discounts.
Why not make that quality information more readily available to advertisers? The reason seems to be that the Yahoo! Publisher Network, like any content network, has to work both for advertisers and Web publishers.
“This is a nuanced operation that we’re running around quality-based pricing,” Davis says. “It’s not necessarily focused on punishing the partners and the publishers but on trying to drive value for the advertisers. It’s another tool in the arsenal of the ways we evaluate our partner network through our marketplace integrity team.”
The new quality pricing should serve as an incentive to publishers who may not now be doing all they can to deliver quality traffic, Davis says. “We think if the overall quality of the network is driven up, then everybody will benefit from that, including the partners and publishers.”
But Davis says a related enhancement to YPN, due later this year, will let advertisers exclude specific domains from their Yahoo! contextual campaigns. So marketers who are able to determine which sites are consistently running their ads at discounted prices may decide they’d rather simply turn off placement on those sites, price break or no price break, and pay more for better quality traffic elsewhere.
A posting about the new policy on the Yahoo! Publisher Network blog drew comments from some publishers who didn’t sound sold on the notion of a rising quality tide lifting their specific boats.
“So basically, if the publishers do what they are supposed to do but the advertisers don’t make enough money in return for their advertising, the publishers get screwed out of money,” wrote eagletalontim. “Sounds good. What else is YPN going to do to us publishers?”
And as Jennifer Slegg pointed out on her JenSense blog, which tracks contextual marketing, the new system is dependent on Yahoo!’s ability to make sure the ads it delivers to publisher sites are relevant. “If I have a site about hockey yet am seeing ads for mortgages and long distance, those ads are definitely not targeted to those visitors,” she posts. They’ll convert less often and risk incurring the quality discount. Thus publishers “could find themselves losing revenue through no fault of their own, but simply because Yahoo! is not providing ads that are targeted to the content,” Slegg writes.
But as she also points out, Google has offered a version of these quality-based price discounts on its own content network for some time now under the name Smart Pricing. When that was introduced in 2004, a measurable number of publishers jumped ship from Google’s content network to Yahoo!’s specifically to get away from the risk of these discounts.
Given the hold that Google and Yahoo! have on the search marketing industry, those discount-shy Web sites may have to simply bite the bullet and let the search engines rate their click worthiness.
