Yahoo Addresses Concerns Over New Search Ad Pricing Model


I had a chance this afternoon to speak to Yahoo! about my Concerns Over Yahoo!'s New Quality Based Pricing.

In short, I rationalized that since Yahoo! is using an advertisers (in aggregate form) conversion rate to decrease the price they pay per keyword. They can then logically use the same data to increase an advertisers bid.

I am glad to report that after speaking with Yahoo! about this, I am convinced whole-heartedly that Yahoo! would not go to this level. In fact, I could hear the distaste and disappointment in their voice over the possibility of even some advertisers thinking this.

Reggie Davis, Yahoo!'s vice president of marketplace quality, told me:

Yahoo! is dedicated to continually enhancing the quality of our marketplace so we can deliver better value to our customers. We've introduced quality-based pricing in an effort to provide our advertisers higher ROI from our sponsored search and contextual ad offerings and to encourage publishers to focus on the quality of their traffic if they want to take full advantage of our marketplace. This initiative is not about increasing the amount you pay for traffic from high-quality sites -- you will never pay more than your maximum bid amount. Our plan is to grow our ecosystem by delivering better value to advertisers, which we hope will encourage additional participation in our marketplace and in turn provide even more relevant results to our consumers – which, in the end, benefits both Yahoo! and its publishers.

Personally, I am happy with this response and I believe it sets a standard for Yahoo!'s bidding methodologies in the future.

Continued forum discussion at Search Engine Watch Forums.

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06/07/2007 04:18 pm

Um.. yeah. with good old "Honesty" like this, who needs cops anymore? who needs lawyers. Thanks why I just added Yahoo to my bank account, so they can just write checks to themeselves whenever they want. Everything is just that smurfy!

Kevin Embree

06/12/2007 11:04 pm

Whether it is labeled "smart pricing" or "quality-based pricing", it outlines a significant problem with Google and Yahoo's content networks. There is value in the content networks but advertisers must audit their ad clicks and mitigate the impacts of Made For Adsense (MFA) and parked domain sites. These types of sites will quickly deplete your budgets across thousands of domains with no conversion. Instead of "quality-based pricing", consider that Yahoo should consider automatic "quality-based blocking" and prevent advertiser's ads from appearing on these low quality sites - or terminate the sites from the publisher network.

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