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.