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Wednesday, Jun. 6, 2007 at 2:51 pm

Yahoo Highlights Conversion Rates With New Ad Pricing

By Robert Gorell
June 6th, 2007

Yahoo! just announced that they’ll now give advertisers discounts based on and ad’s “quality”–or, more specifically, how well it converts.

Search Engine Roundtable‘s Barry Schwartz puts the news into perspective:

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.

The publisher feedback and comments are definitely worth checking out. This news comes in the wake of Google‘s announcement in March that they would offer a Pay-Per-Action model, which also (theoretically) promotes overall conversion.

Will these changes affect your advertising strategy? Are the big search engines just trying to not seem greedy, or do you see this as an honest effort to make ads more relevant?

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Comments (5)

  1. Whereas Google’s PPA model puts both the advertiser and the publisher in control (both in set-up and reporting), Yahoo!’s quality based pricing is a very opaque effort. My understanding is that we as advertisers may or may not see a decrease in CPC and overall spend. There is no report associated with this “discount” so there’s no way to quantify it’s effectiveness.

    To answer your questions Robert, these changes will likely have little effect on how I manage my PPC campaigns in YSM. As for being greedy, this is a point that could be discussed ad nauseum! : ) There is the faintest hint of the search engines trying to improve relevancy. So I’ll roll with the punches.

  2. [...] Yahoo Highlights Conversion Rates With New Ad Pricing By Robert Gorell 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. … Conversion Rate Marketing Blog… – http://www.grokdotcom.com [...]

  3. [...] Yahoo Highlights Conversion Rates With New Ad Pricing [...]

  4. that trial from yahoo was abandoned a long time ago

  5. Does Yahoo still have this particular Pay Per Action feature? The reason why I ask is because it sounds pretty similar to the Google Conversion Optimizer where google offers lower costing traffic if your conversions are good.

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