Yahoo! Putting the Last Knife in the Auction System
To most Americans, Adam Smith is the pioneer of the economic standard (even though he was a Scot). He was ahead of his time in recommending, on a backdrop of colonial independence that there should be less government intervention in the modern economy; and that a free market system would not only sustain itself, but also provide the best economic return. In other words, a consistence transparency and competitive environment would keep costs in check. A competitive environment stops any one person from demanding too high of a price, and knowing what your competition is willing to charge/pay keeps you competitive. Everything is in balance an equilibrium.
However, for Search Engines, who make there money based largely on Cost per Click - having a high level of transparency isn't profitable. Google makes unbelievable returns because knowing the competitive landscape for sponsored campaigns is difficult at best. Marketers can only really speculate on bid prices (besides that isn't the only factor in Google's algorithm that determines CPC) for certain positions. The result is highly relevant results (I would like to believe this) - as Marketers focus on messaging and landing page content to vie for the best SERP position. However, the one obvious result of all this activity is that the CPC for any one keyword is not as controllable in Google as it is in Yahoo! - you cannot buy a position, you cannot instantly see that a keyword is too costly for you to enter the competitive fray, and you cannot instantly see the competitive opportunities / advantageous points of entry. (But I suppose that is why people hire firms like ours.)
The Yahoo! Panama update has been talked about incessantly. We all knew it was coming down the pipe, and although some of the features I am actually quite excited about (like the innovation of tracking keyword/click assists) - I am least excited about the movement form concrete numbers to a Google type estimate. And yet, this is the first across the board change; meaning that even if you haven't upgraded to the new interface, as of next month you will no longer get the "Top-5 Max Bids","Position" or "Your Cost" columns in the Yahoo! sponsored interface. Instead, you will get ranges and estimates.
What are the Real Implications?
For a lot of sponsored strategists running campaigns in Yahoo!, the best bidding strategy was something called "bidding the gap/Gap Surfing." This was when you could see that there was a gap between first and second position's bids (for example) that made owning the position possible. For example, let's say the top bid was $1.00 and the second bid was $0.10; by bidding $0.99 you could buy the second position for a CPC of $0.11 (because of Yahoo!'s "penny more" rule). With this change, the transparency needed to bid the gap no longer exists. You cannot buy a position any more for the least amount of money. If all you have are estimates, you have to incrementally increase your bid price for best position. What is the result? Overall, the CPC for everybody will go up, as those competitors with the deepest pockets throw more money into the pot for the same market share.
The only person that really benefits here is Yahoo!, as profits will grow.
Whether or not you think this will get more relevant sponsored results in the Yahoo! SERP is a question of whether or not you think the market itself is the best regulator. Most businessmen think that the market does a pretty fine job of regulating itself, but then there always seems to be an ENRON in the midst. However, on the flip side, how often does eBay or Amazon take the number one spot in Google's SERP? That isn't highly relevant either.
The New Concern
Google's keyword tool currently provides ranges, not numbers when helping marketers determine the best keyword to optimize content for or build a sponsored campaign around. The only caveat is that Google doesn't provide a baseline for those range graphs. According to the graphs, "Business" has a slightly higher search volume than "EDI" - unlikely!
As well, we have no idea what number the graph is representational of... is a full graph equal to 1 million searches or 5? Yahoo!, on the other hand provides real numbers - a quantifiable metric to calculate opportunities. In addition, Yahoo! provides real bid costs so you can correlate volume and cost to make the right strategic decision. Now that they are moving to estimates and the "view bids" option will no longer be available - how right will our decisions be tomorrow?
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However, for Search Engines, who make there money based largely on Cost per Click - having a high level of transparency isn't profitable. Google makes unbelievable returns because knowing the competitive landscape for sponsored campaigns is difficult at best. Marketers can only really speculate on bid prices (besides that isn't the only factor in Google's algorithm that determines CPC) for certain positions. The result is highly relevant results (I would like to believe this) - as Marketers focus on messaging and landing page content to vie for the best SERP position. However, the one obvious result of all this activity is that the CPC for any one keyword is not as controllable in Google as it is in Yahoo! - you cannot buy a position, you cannot instantly see that a keyword is too costly for you to enter the competitive fray, and you cannot instantly see the competitive opportunities / advantageous points of entry. (But I suppose that is why people hire firms like ours.)
The Yahoo! Panama update has been talked about incessantly. We all knew it was coming down the pipe, and although some of the features I am actually quite excited about (like the innovation of tracking keyword/click assists) - I am least excited about the movement form concrete numbers to a Google type estimate. And yet, this is the first across the board change; meaning that even if you haven't upgraded to the new interface, as of next month you will no longer get the "Top-5 Max Bids","Position" or "Your Cost" columns in the Yahoo! sponsored interface. Instead, you will get ranges and estimates.
What are the Real Implications?
For a lot of sponsored strategists running campaigns in Yahoo!, the best bidding strategy was something called "bidding the gap/Gap Surfing." This was when you could see that there was a gap between first and second position's bids (for example) that made owning the position possible. For example, let's say the top bid was $1.00 and the second bid was $0.10; by bidding $0.99 you could buy the second position for a CPC of $0.11 (because of Yahoo!'s "penny more" rule). With this change, the transparency needed to bid the gap no longer exists. You cannot buy a position any more for the least amount of money. If all you have are estimates, you have to incrementally increase your bid price for best position. What is the result? Overall, the CPC for everybody will go up, as those competitors with the deepest pockets throw more money into the pot for the same market share.
The only person that really benefits here is Yahoo!, as profits will grow.
Whether or not you think this will get more relevant sponsored results in the Yahoo! SERP is a question of whether or not you think the market itself is the best regulator. Most businessmen think that the market does a pretty fine job of regulating itself, but then there always seems to be an ENRON in the midst. However, on the flip side, how often does eBay or Amazon take the number one spot in Google's SERP? That isn't highly relevant either.
The New Concern
Google's keyword tool currently provides ranges, not numbers when helping marketers determine the best keyword to optimize content for or build a sponsored campaign around. The only caveat is that Google doesn't provide a baseline for those range graphs. According to the graphs, "Business" has a slightly higher search volume than "EDI" - unlikely!
As well, we have no idea what number the graph is representational of... is a full graph equal to 1 million searches or 5? Yahoo!, on the other hand provides real numbers - a quantifiable metric to calculate opportunities. In addition, Yahoo! provides real bid costs so you can correlate volume and cost to make the right strategic decision. Now that they are moving to estimates and the "view bids" option will no longer be available - how right will our decisions be tomorrow?posted by ricktobin at
8:38 AM
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