Yahoo's New Quality Based Pricing Looks at Conversion Rates

 

Yesterday, I reported at Search Engine Land the launch of Quality-Based Pricing. In short, Yahoo will now begin to give advertisers a percentage discount, based on the ad's quality.

What makes up the quality of the ad? Yahoo told me, "publisher conversion rates, traffic source and implementation type." Now this is not live across all keywords yet, but will be in a few months.

When Yahoo told me the criteria, I had to take a second look. Did Yahoo say "publisher conversion rates?" Yes, they did. So I asked Yahoo for more information.

Yahoo is looking at how a publisher may convert for advertisers and adjust the pricing of the ad based on that. I asked Yahoo to clarify:

Rather than the overall number of leads sent to advertisers (conversion rates), the publisher conversion rate is the number of leads that the publisher send to advertisers that actually result in a conversion (e.g., a sale, a sign-up, etc. - whatever the advertiser has defined as a conversion event).

So it is not based simply on click through rate. So I asked what happens when an advertiser doesn't set a conversion metric? Well, since it is based on the "aggregate performance across the Yahoo network," even if one advertiser doesn't set a conversion metric, others probably will and they can use those data points in determining the pricing of the bids.

What do the forums think? Here are some quotes:

Publisher's perspective:

So much for YPN paying out so much better than Adsense.. All of that is over..

As an advertiser this is good news.

I think YPN first needs more the advertisers than the publishers. That's why they are doing this, to keep the comfort level of advertisers. They can run ads in their search engine too

This is just like Smart Pricing in AdSense, if you have low quality traffic (converts badly), you will get paid less.

Forum discussion at Search Engine Watch Forums, WebmasterWorld - YPN, WebmasterWorld - YSM and DigitalPoint Forums.

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