Yahoo to change the way they rank PPC ads

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Yahoo to change the way they rank ads - Cut and paste of notification below

Quote:
Bid Amount and Ad Quality will Determine an Ad's Rank in Search Results Beginning February 5, 2007 in the U.S.

With new features like ad testing, geo-targeting and fast ad activation, the new Sponsored Search gives you more ways to connect with customers searching for what you sell.

On February 5, 2007, we are introducing a new ranking model in the U.S. that considers an ad's quality and bid amount. The new model is designed to help you spend less time in bidding wars and more time creating the most relevant, effective ads, which can help drive better results for your business.

Here's a quick summary of this important change:

Both bid amount and ad quality will determine an ad's rank in search results beginning February 5, 2007.

This will replace the current method, in which ads are ranked by bid amount only (bid-to-position).

This is designed to allow you to focus less on competitive bidding practices and more on the quality of your ads.

By improving the quality of your ads and making them more relevant to users, you may be rewarded with a better ranking and/or a lower cost for your ads.

Example of How Ads May be Ranked
The graphic below helps illustrate a scenario that may result from this change:

Note: The graphic above is provided for illustrative purposes only, and will not actually appear in your account.

What is "Ad Quality"?
Ad quality is determined by:
The ad's historical performance - its click-through rate relative to competitors and normalized for position.

The ad's expected performance - determined by various relevance factors considered by Yahoo!'s ranking algorithms, relative to other ads displayed at the same time.

Overall ad quality is displayed in a graphical form by the quality index.

Other Important Things to Know

We recommend that you review your current max bids. Keep in mind you may be charged up to this amount. Learn More

Standard match type ads will no longer receive priority placement over Advanced match type ads. Learn More

Fewer Sponsored Search results may now appear at the very top of the page for certain search terms. Learn More

Starting on February 5 there will be a transition period during which forecasting tools will accumulate more data about the new ranking model to provide better traffic estimates. Learn More

To learn more about the quality index, the new approach to ad ranking and helpful tips, please click here.

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Further Questions?
If you have questions, please contact our Customer Solutions department via the Support Request Form or call 866-YAHOO-98 (866-924-6698).

Comments

Yahoo PPC Changes

With the new Panama that is coming in, they seem to be bringing their structure in line with Google & AdCentre. In all it seems to be positive changes that rely on skill, not cash to get the results needed.

Once they hit the UK accounts, I'm hoping that any difficulties they seem to be experiencing in the US have been ironed out.

SF

Is it so hard to disclose

Is it so hard to actually disclose to your paying advertisers exactly how their ads are ranked? I can't believe people (myself included) stand for this 'secret ingredient' stuff. A similiar model in the offline world would have people screaming murder. Yet here we sit, letting the SE's determine secretly how they'll rank our ads.

Will the minimum bid go down to 5c?

They reduced the miniumum bid in UK to 5p, will we see that in US?. The have to realise there is a awful lot of search inventory which can only be monitized between 5 cents to 10 cents!

Training people NOT to click on ads...

I've always suspected that the "Ad quality" formula would not be tenable forever (for Google, and now Yahoo).

The theory being that even with a relevance formula factored into ranking the ads still are not as relevant as the natural results, and via conditioning consumers won't tend to click on the paid ads as much.

Does anybody know of any sort of research being done on this anywhere outside of Google/Yahoo/MSN? It would be an interesting longitudinal study.

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