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The WSJ reported that Google and Yahoo! have inked a non-exclusive ad deal

Yahoo said it will display some ads sold by Google in an agreement estimated to generate $800 million in annual revenue. In the first 12 months following implementation, Yahoo expects the deal to generate an estimated $250 million to $450 million in incremental operating cash flow.

Both companies have agreed to "delay implementing the deal for up to three and a half months while regulators review it." The deal can be terminated at any point in time, but if it is terminated within 24 months Yahoo! will owe Google $250 million.

The partnership is only for the US and Canadian markets, but expands beyond Yahoo!'s search results into Yahoo! content ads and even the syndicated Yahoo! Publisher Network. Given Yahoo!'s poor ad relevancy and that they are reselling Google ads, how will the Yahoo! Publisher Network ever gain marketshare from AdSense?

Beyond the incremental revenue stream, this also gives Google another opportunity to spy on web users who use their largest competitor - allowing Google to get a better view of the average web user and making it easier for Google to clone and beat Yahoo! in any market where Yahoo! leads.

Here is Google's take, and the full Yahoo! press release is below

Yahoo! to Strengthen Competitive Position in Online Advertising Through Non-Exclusive Agreement With Google
Thursday June 12, 6:16 pm ET

Agreement Advances Yahoo!'s Open Strategy; Enhances Ability to Compete in Converging Search and Display Marketplace

SUNNYVALE, Calif.--(BUSINESS WIRE)--Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, announced today that it has reached an agreement with Google Inc. that will enhance its ability to compete in the converging search and display marketplace, advancing the company’s open strategy. The agreement enables Yahoo! to run ads supplied by Google alongside Yahoo!’s search results and on some of its web properties in the United States and Canada. The agreement is non-exclusive, giving Yahoo! the ability to display paid search results from Google, other third parties, and Yahoo!’s own Panama marketplace.

Under the terms of the agreement, Yahoo! will select the search term queries for which – and the pages on which – Yahoo! may offer Google paid search results. Yahoo! will define its users’ experience and will determine the number and placement of the results provided by Google and the mix of paid results provided by Panama, Google or other providers. The agreement applies to paid search and content match and does not apply to algorithmic search. The agreement also applies to current partners in Yahoo’s publisher network.

Yahoo! CEO and co-founder Jerry Yang said, “We believe that the convergence of search and display is the next major development in the evolution of the rapidly changing online advertising industry. Our strategies are specifically designed to capitalize on this convergence -- and this agreement helps us move them forward in a significant way. It also represents an important next step in our open strategy, building on the progress we have already made in advancing a more open marketplace.”

“This agreement provides a source of funds to both deliver financial value to stockholders from search monetization and to invest in our broader strategy to transform display advertising and advance our starting point objectives with users,” said Yahoo! President Sue Decker. “It enhances competition by promoting our ability to compete in the marketplace where we are especially well positioned: in the convergence of search and display.”

Agreement Provides Attractive Economics and Enhances Search Monetization

Yahoo! believes that this agreement will enable the Company to better monetize Yahoo!’s search inventory in the United States and Canada. At current monetization rates, this is an approximately $800 million annual revenue opportunity. In the first 12 months following implementation, Yahoo! expects the agreement to generate an estimated $250 million to $450 million in incremental operating cash flow.

The agreement will enhance Yahoo!’s ability to achieve its goal to grow operating cash flow significantly, while at the same time providing flexibility to continue to invest in ongoing initiatives such as algorithmic search innovation and search and display advertising platforms. It gives Yahoo! complete flexibility to continue to use its Panama paid search results.

Significant Benefits Will Flow to Users, Advertisers, Publishers and Employees

Users will also benefit from Yahoo!’s ability to invest incremental operating cash flow in ongoing improvements to its search services, building upon recent major innovations such as Search Assist and SearchMonkey. Advertisers will continue to benefit from multiple marketplace alternatives including Panama, Google and others. Publishers will benefit from a winning combination of distribution, monetization and services to help them grow their businesses. The financial benefits will enable Yahoo! to broaden the scope of its investments and initiatives, enhancing Yahoo!’s ability to offer attractive career opportunities to its employees.

Terms of the Agreement

The agreement will enable Yahoo! to run ads supplied by Google's AdSense™ for Search and AdSense™ for Content services next to Yahoo!’s internally generated paid search and algorithmic search results. Yahoo may also run Google-supplied ads on non-search Yahoo web properties, as well as on current members of its partner network. The agreement has a term of up to ten years: a four-year initial term and two, three-year renewals at Yahoo!’s option. It applies to Yahoo!’s operations in the U.S. and Canada only. Advertisers will continue to pay Yahoo! directly for clicks served by Yahoo! from Yahoo!’s Panama and Content Match marketplaces. Advertisers will pay Google directly for each click on Google paid search results appearing on Yahoo! owned and operated network or certain affiliate sites. Google will share a percentage of such revenue with Yahoo!.

In addition, Yahoo! and Google agreed to enable interoperability between their respective instant messaging services, bringing easier and broader communication to users.

The agreement allows either party to terminate the agreement in the event of a change in control of either party. The agreement also requires Yahoo! to pay a termination fee if the agreement is terminated as a result of a change in control that occurs within 24 months. The termination fee is $250 million, subject to reduction by 50 percent of revenues earned by Google under the agreement.

Although Google and Yahoo! are not required to receive regulatory approval of the deal before implementing it, the companies have voluntarily agreed to delay implementation for up to three and a half months while the U.S. Department of Justice reviews the arrangement.

Goldman, Sachs & Co., Lehman Brothers and Moelis & Company are acting as financial advisors to Yahoo!. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to Yahoo!, and Munger Tolles & Olson LLP is acting as counsel to the outside directors of Yahoo!.

Yahoo! will host a conference call to discuss the agreement with Google at 6:30 p.m. Eastern Time today. To listen to the call live, please dial 877-391-6847 (reservation number 70308474#). A live audiocast of the conference call can be accessed through the Company's Investor Relations website at http://yhoo.client.shareholder.com/index.cfm. In addition, an archive of the audiocast can be accessed through the same link. An audio replay of the call will be available following the conference call by calling 888-286-8010 (reservation number 84138579).

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After hearing a few people mention the NBA finals I went over to Yahoo! Sports to check it out. The Celtics are ahead of the Lakers 1 game to 0. Given the history of that rivalry it is no surprise that decent NBA Finals Tickets are selling for over $1,000 and courtside tickets fetch $20,000 or more. Yahoo! paid the editorial costs to create great content relevant for this high profit margin niche, and what do they do with it? They waste it.

How are these ads relevant to an article about the NBA finals? Mind you this is Yahoo!'s own editoral content located on sports.yahoo.com, so it can't be hard to make an algorithm a bit more relevant than that.

Given Yahoo!'s irrelevancy it is no wonder that they are heavily reliant on arbitrage and syndication - they need those players to add relevancy to their broken ad platform. At least the people who are paying for the clicks care about a relevant experience, though one would imagine Yahoo! could earn more with an honest attempt at relevancy.

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Since buying out Yahoo! seemed too expensive, Microsoft is back again with another offer. Microsoft's Statement:

In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo! Inc., Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business. Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo! Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties.

There of course can be no assurance that any transaction will result from these discussions.

From AllThingsD:

The software giant would not give details, but sources at both companies said it involved Microsoft buying Yahoo’s search business and the ad business related to text-based ads.

Kevin Johnson also posted an internal Microsoft memo on News.com.

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Most Yahoo! Search Ad Clicks Are NOT From Yahoo!

Danny Sullivan mentioned Efficient Frontier research which stated that 55% of Yahoo! Search ad clicks from last week were from syndication partners.

Arbitrage Clicks Have Less Value

If you normalize the above Yahoo! numbers you will see that search clicks convert nearly twice as well as their syndication traffic does.

Imagine how ugly those numbers were before both Google and Yahoo! aggressively fought click arbitrage. Yahoo! let advertisers take the shaft for years and years, and only started caring this year after Microsoft's offer to buy them out.

Comparing Google Click Prices to Yahoo! Search Marketing Click Prices

What type of clicks are likely to be driven by arbitrage and other syndication partners? Arbitragers are more likely to go after high value keywords, thus driving down their value. Buying a valuable keyword like "mortgage" on Google costs much more than it does on Yahoo!.

Google AdWords Average Estimated CPC: $15.58

From Google Traffic Estimator

Yahoo! Search Marketing Average Estimated CPC: $4.85

From Yahoo! Search Marketing's keyword tool (Yahoo! Search Marketing account required)

Default Pricing Options

I did not enter bid prices in the above tools. Those were the default bid prices the tools suggest for mortgage. The difference in click cost is an indication of how much Yahoo! is undermining the value of their own traffic to prop up syndication partners that funnel dirty traffic through the Yahoo! Search Marketing ad network. Even when I slid the Yahoo! tool all the way to the right it said the estimated click cost was $4.98 - less than 1/3 of Google's suggested price.

Yahoo! has to sell 3 mortgage clicks to make as much as Google makes from 1, but Yahoo! sells a couple of those clicks through syndication partners which keep most of the ad revenue.

Yahoo! Search Syndication Blows

Advertisers Are Forced Into Ad Syndication

Because Yahoo! makes it hard to opt out of search syndication they are essentially paying shoddy syndication partners 70 to 80% payout for arbitrage that builds volume, but destroys the value of Yahoo! Search.

Put another way, a Yahoo! click for mortgage is worth the same $15 that it costs on Google, but it goes for less than $5 because Yahoo! forces advertisers to eat junk traffic too. If Yahoo! virtually killed off their syndication partnerships (at least all but the cleanest ones) their short term revenue might decrease, but their click values & click prices would sharply increase.

Google AdWords to the Rescue?

Google is Not a Viable Solution

Yahoo! mentioned the possibility of syndicating Google ads if the Google ads paid more, but if they do that then Google gets Yahoo!'s best inventory while Yahoo! Search Marketing advertisers buy random mystery meat traffic. What exposure do you get from a Yahoo! Search Marketing ad account if your ads do not appear on Yahoo!? Sounds a lot like Looksmart to me.

If They Syndicate Google Ads, Yahoo! Search Marketing Becomes a Market for Lemons

Yahoo! already has less traffic and lower quality traffic than Google. If they outsource their best traffic to Google savvy marketers will quickly talk about how Yahoo! has low quality and you should just advertise with Google. The perception of market decay and market whispers will only accelerate the decay. When it comes time for Yahoo! to renew with Google they would have lost most of their leverage.

Once again Yahoo! may find a way to pump their short term numbers, but it is not a strategy they should try building their business around. The first step to restoring value to their search results should be making it easy for advertisers to opt out of ad syndication. If they syndicate Google AdWords most advertisers should just opt out of Yahoo! all-together.

What Should Yahoo! Search Marketing Do?

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Microsoft decided to walk on the Yahoo! deal. After the sharp Yahoo! stock decline Monday, expect many shareholder lawsuits. The press release contained the following open letter to Jerry Yang.

Dear Jerry:
After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo!.

I first want to convey my personal thanks to you, your management team, and Yahoo!'s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible.

I am disappointed that Yahoo! has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions.

In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.

Also, after giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft.

We regard with particular concern your apparent planning to respond to a "hostile" bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:

• First, it would fundamentally undermine Yahoo!'s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth.
• Given this, it would impair Yahoo's ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.
• In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.
• This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google.
• It could foreclose any chance of a combination with any other search provider that is not already relying on Google's search services.

Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft's proposal to acquire Yahoo!.

We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.

I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.

But clearly a deal is not to be.

Thank you again for the time we have spent together discussing this.

Sincerely yours,
/s/ Steven A. Ballmer

Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation

Any guess as to Yahoo!'s closing share price Moday? Vote on this poll and guess below. If you are the first person to guess within a dime you get a free month of access to our online SEO training program.

The short term upside for search marketers is that this lowers the odds of Yahoo! gutting itself by outsourcing paid search to Google.

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From their press release:

Yahoo! Inc. a leading global Internet company, announced today that it will begin a limited test of Google Inc.'s AdSense for Search service, which will deliver relevant Google ads alongside Yahoo!'s own search results. The test will apply only to traffic from yahoo.com in the U.S. and will not include Yahoo!'s extended network of affiliate or premium publisher partners. The test is expected to last up to two weeks and will be limited to no more than 3% of Yahoo! search queries.

Anyone who syndicates Yahoo! ads or operates a business that relies on selling clicks has to be concerned with this news.

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Yahoo! has guys like Jeremy Zawodny marketing their fresh new search platform, and yet they remain behind the competition. Microsoft jumped into the search field way later than Yahoo! did, so why is it that Microsoft rankings for well promoted sites often roughly track Google rankings, while Yahoo! still has yet to give many of these sites an opportunity to rank?

Here are some examples of what I am talking about (with URLs expunged to protect the guilty)...

A couple year old site that was lingering about with a few inbound links and was promoted last November. Notice how quickly both Google and Microsoft took to the marketing, whereas Yahoo is still nowhere to be found

Here is a site that was promoted from brand new. Notice how Google and Microsoft are trending toward trusting it more and more, while Yahoo! Search occasionally picks it up and then spits it back out again

Here is yet another newish site that Microsoft loves and Google is starting to like more and more. Yahoo! is still nowhere to be found

If you had to pick the 1,000 most competitive keywords on the web I think all 3 of the above would fall in that group. I could list numerous other example sites as well. All the above sites have been in the Yahoo! Directory for at least 4 months. Even with new sites and a moderate amount of targeted promotion it is not that hard to work your way up into Google and Microsoft's rankings, but Yahoo usually ignores it.

I have highlighted that Yahoo! Search has their domain authority score overemphasized in their relevancy algorithms, which causes a lot of parasitic SEO to dominate their search results, but do they even care?

Can you rank a new site in Yahoo! for terms like insurance without getting it nuked in Google? What makes Yahoo! so much slower at ranking new sites than the other major search engines?

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One of the biggest things holding back Yahoo! Search is their preference for Yahoo! content. As a shift in strategy, Yahoo! announced they are opening up their search results to third party data integration. Instead of a typical search result, some of the results with third party data may look like this

Google has largely been pulling in third party data and doing their best to keep that traffic on the Google network. To appreciate how aggressive this has been, you only need to look at the increased size of Google local listings or the sharp decline in stock prices of traditional Yellow Pages companies, as highlighted in this WSJ article.

A couple questions that remain are how interactive will the paid inclusion results get, and will the paid search ads get more interactive as well?

Google has a similar program to what Yahoo! offers, with a couple major differences

• Yahoo! will turn on third party data for some leading sites by default
• Google requires you to learn their proprietary confusing language AND promote Google, Google Search, Google Subscribed Links, AND get your users to subscribe for you to get any additional exposure (and yet they wonder why it hasn't taken off yet)

Through different strategies both of the top 2 engines are turning their search results into destinations. Worth watching as it progresses. More information available at Search Engine Land.

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Does it make sense for MySpace profile pages to rank on the first page for one of the 10 most competitive terms on the web? Should English to English page translations inherit domain authority from another domain? I don't want to out anybody, but I see way too many tag pages ranking in Yahoo!'s search results. The easiest way they can improve their search results is to simply delist any page with tag in the URL.

If they continue down this path inside a few months they will link to nothing but internal site search / tag pages on other sites. Where is the value, innovation, or thought process in that? What percent of Yahoo! searchers want to see Wordpress.com tags pages and how many Yahoo! Pipes pages are tagged with a brand name? What does a searcher do when they land on a page like this?

If you are going to trust user generated content on authority sites, expect a lot of users to create content just for Yahoo!. :)

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Yahoo!'s Downward Trend

Yahoo! killed off their brand universe project, and recently fired 30 people. Rumor has it that about 2,000 more layoffs might be coming soon. Yahoo! shares are nearing $20, trading at $20.78, and giving them a market capitalization of $27.8 billion.

This WSJ article highlights that about half of Yahoo!'s value is in cash and equity stakes in Alibaba and Yahoo! Japan. Over the last year Yahoo! lost significant momentum and marketshare in search. They need to outsource search and search ads, fire a bunch of employees, gain search marketshare, or there is going to be a buyout or merger before the year is out.

Pageviews Still do Not Have Much Value

Sidebar: to anyone hyping the value of pageviews and social media, think of how many pageviews Yahoo! has. If you pull out the value of Yahoo!'s large equity stakes in other companies and cash on hand, Amazon and eBay are each worth about 2 to 3 times Yahoo!, and Google is worth about 13x.

10 Key Ideas Yahoo! Needs to Implement Tomorrow (or Sooner)

After seeing the underwhelming launch of Wikia Search, I think Yahoo! should push further in human aided search. Relevancy is based on perception and marketing. Yahoo! needs to do the following if they want to compete in search:

1. Increase the relevancy of their directory by actually featuring it (the directory looks like a sidebar to a blog that occupies most of dir.yahoo.com), and by becoming more selective with what sites they accept. You can appreciate their bad marketing of the Yahoo! Directory by the fact that the Google Directory (a DMOZ clone) has a higher PageRank.
2. Yahoo! is testing integrating Del.icio.us data in their search results. Brand Yahoo! search as human edited safe search and find a way to pay end users for their contribution. Payment does not need to be monetary. Take a look at the success of Yahoo! Answers and Del.icio.us and apply those toward search. Google gives Checkout advertisers free ads and a higher ad CTR (which leads to a lower ad cost). Win search marketshare from your users by giving them rebates on your other products as well.
3. Create a branding and awareness campaign around the new Yahoo! Search. Hire someone to do a fake study proving that Yahoo! Search is more relavant than any of the other players. Make sure Ask or Microsoft is ranked #2 ahead of Google.
4. Let users comment on search results AND on listings in search results. Controversy surrounding this will lead to more people talking about and evaluating Yahoo! Search for quality.
5. Launch a new toolbar with a meter like PageRank in it...call it YourRank (or something the emphasizes to the user) that it is their web and what they like. Heavily push that branding message to users locked into Yahoo! email, Yahoo! Stores, and other verticals they interact with.
6. Create a well branded specialty search for bloggers with innovative features that make it easy to follow the conversation both ways. Also launch creative ideas to buy mindshare with other high authority communities (universities, open source projects, etc.).
7. Easily allow advertisers to do keyword research on Yahoo! outside of while they are setting up search campaigns. Create a reliable publicly accessible keyword tool which actually markets the Yahoo! Search product.
8. Give away a lot of useful search market data (like Microsoft recently did with their Ad Intelligence plug-in).
9. Put the Yahoo! brand on the millions of syndicated domain landing pages they power each day.
10. Increase the relevancy of their contextual ad product and increase payouts to 100% (buy marketshare) BEFORE Microsoft openly launches their network. Perform case studies with publishers who saw their Yahoo! monetization go up AFTER switching from AdSense (and other inferior networks) to the NEW Yahoo! Publisher Network contextual ads program. Perhaps pay key leading bloggers 150% just to get them using, talking about, and giving feedback on your ads. Buy marketshare...

How Could Yahoo! Become Relevant?

Do you still use Yahoo! Search? What could Yahoo! do to make you want to use them and talk about their search product?

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I was sad to see Barry's post about Yahoo! showing garbage stats to unauthenticated users.

Not that they asked for it, but here is my advice for Yahoo! Search:

• Following Google's moves from last year is no way to catch them.

• How about marketing yourself on your key properties.
• Invest in Wikia search and share technology with them to attack Google from multiple fronts. Google engineers have openly admitted to frequently hand editing the search results. Now that search is back to being about people tell the USER that it is their web and THEY own it.
• What if you assumed you already lost the search battle and decided to counter Google by being open about search, and being actively involved with the webmaster community? What is the worse that can happen? People start talking about you, trying your product, giving you feedback to improve your product, talk about you, and you gain marketshare. Oh no!

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Yahoo search normally moves rather slowly with small changes, but I just saw some pretty big shifts in Yahoo rankings, including

• botching part of a sitewide 301 redirect that they had followed for months - now both sites rank, but each ranks well for some portion of the queries
• a bit more weight on domain names

What are you seeing?

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Yahoo! recently did another search index update with little fanfare. To me it looks like they put more weight on exact match domain names, inbound link anchor text, and domain authority.

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Yahoo! announced their Panama API today. They also announced the beginning roll out of their quality based pricing for content websites:

Previously, you were charged the same for traffic from all web sites within our distribution network. Now, with quality-based pricing, you may be charged less for certain clicks than you otherwise would pay, depending on the overall quality of the traffic provided by our distribution partners. As a result, your click charges can decrease.

As Yahoo! cleans up their content network look for many of their partners to switch to Google, which has a deeper ad network and better relevancy algorithm.

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Not talked about much, but my partner noticed Yahoo! once again shifted paid inclusion to a yearly flat rate.

While Search Submit Pro allows you to have more control over listings and is sold on a costs a per click basis, their Search Submit Basic allows you to submit URLs for $49 per year per URL.

In the past Search Submit Basic was called Search Submit Express. It charged a flat inclusion price and sold clicks on CPC basis. Here is an Archive.org link to the old program.

If you have launched a new site and are not getting much Yahoo! traffic, submitting a few of your highest value pages is a good call. If you have key deep high value pages that are not staying indexed in Yahoo! this program also makes sense.

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Yahoo! allows paid inclusion members to buy quick links in the search results and indexes sites more fully if they use Yahoo! for their site search. While neither of these may seem like a big deal they both are.

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When Yahoo! bought Overture they had the market default position as being THE KEYWORD TOOL. As a company that makes most of its profits from selling keywords, how dumb is is for them to let their keyword research tool die without warning? If they are upgrading their paid search platform, killing the current tools without warning is a dumb first step toward getting marketers to warm up to the exciting new system.

Stop double and triple mailing the direct mail pieces. Do a bit of market analysis on your market position and current resources. Fire the people who keep doing the dumb things.

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It seems a large part of the reason that Yahoo!'s stock recently tanked was the market was punishing them for delaying their ad system.

I know factoring clickthrough rates into ad costs will help optimize their revenue stream, but does anyone think the new system will help them catch Google on the monetization front?

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I do not think the recent Yahoo! Update was as sharp as they may have hoped for.

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How is it possible that when you have a domain name, page titles, internal linkage, external linkage, page content, and search referal strings that all HEAVILY are focused around a specific state or region that Yahoo! shows many regionally targeted ads, but typically none that are relevant for the region your site targets?

Imagine a site that ranked well for everything related to Colorado mortgage but nearly exclusively showed credit card ads or mortgage ads for non-Colorado states. How are people going to click on those ads? How are those leads valuable to businesses?

Pretty bad relevancy there Yahoo!

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Imagine you were going to create a website about Legos. You could ask what is the best Lego set? at Yahoo! Answers to find content and topics to write about. Fast and free.

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It might be a good idea to check out Yahoo! Answers. Yahoo! just integrated them into their SERPs.

You can see the integration on [best dog for apartment] and on the page footer of [Harley Davidson]

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1 hour video with Terry Semel on the future of the web and media.

Via Peter.

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Seems like Yahoo!'s related phrases / seo also section is based at least partially upon co-occurance of words in close proximity of one another across various web pages.

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It looks like Yahoo! was waiting for MSN to dump them before rolling out their new PPC product. MSN dumped them last week, and today Yahoo! is already launching their shiny new PPC system.

The new system is going to be rolled out in stages. This stage is mostly about improving the underlying data and analytics platform. On the 17th of May they intend to announce the new PPC relevancy algorithm. In the third quarter they also plan on integrating analytics that will allow you to buy and track ads on Google or MSN as well.

More news and likely a bit of discussion at TW.

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Already mentioned everywhere else, but I think it is worth noting that Andrei Broder Joined Yahoo!. Google has been getting the lion's share of hires of big web names (like Vint Cerf), so it is good to see Yahoo! pick up one of them.

Gary Price also added links to a number of research papers Andrei Broder contributed to.

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Another Yahoo! Update coming, followgreg at WMW said it rolled out on 68.142.226.54 first.

I had not mentioned it here yet, but a while ago Yahoo! also dropped the monthly minimum spend on Overture and lowered the initial deposit to $5.

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over the weekend big changes at Yahoo!, according to Marcia

Robert Charlton added in:

I generally haven't watched Yahoo closely, but since the update in late July, where many inside pages dropped like rocks, I've been following some selected niche searches. My thought at the time was that there was some sort of "filtering" in place (and I'm probably using the word inaccurately), much like there was after Google's infamous Florida update.

What seemed to affect some searches and some sites didn't seem to affect others... there was talk of over-optimization penalties... and results just didn't feel right. After Florida, I felt that Google would have to fix it, and eventually they did. I've felt that about Yahoo since the July update, but it hasn't happened yet.

The Yahoo serps are Florida-like in one respect that I haven't seen discussed... nonsense exclusion strings in the search query seem to return to search to an approximation of pre-July normalcy. Add -asdf to a search a bunch of times and you'll see what I mean.

some sample Yahoo! searches:

• [search engine marketing]

• [search engine marketing - adfas]
• [SEO]
• [SEO -adfas]
• [viagra]
• [viagra -adfas]
• [poker]
• [poker -adfas]

What have you noticed different at the big Y! ? Whats with the -blah? Why do the ads not show up when you do an advanced search?

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Biggest, Baddest, ETC:

• Yahoo! says 20 billion items in their index

• At SES DaveN predicted heavy spam problems for them (read as Dave making bank from stuffing spam in their index).
• Interesting to see how little coverage Yahoo! has got compared to Google's similar size matters mentions in the past.
• While Jeremy defends the index size traditional media sources like the New York Times looks to Google co founder Sergey Brin as a credible source to discount the story, and Danny is sick of the size comparisons.
• Google also slightly increased their number (from 8,058,044,651 to 8,168,684,336), which may be an attempt to further refute / undermine Yahoo!'s claim. Gary says Google gave them the new number before Yahoo! did, which makes me wonder if Google has a few people who know the pulse on Yahoo!
• Google always used index size as free marketing it's whole way up, and now that someone is ahead they simply said the figure is useless and everyone agrees. Amazing PR.

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AdSense has some competition coming. News.com posts Yahoo to launch blog ad network:

Yahoo is planning to launch on Wednesday an ad network for small Web publishers intended to strengthen its hand against rival Google, a source familiar with the plan told CNET News.com.
...
Yahoo's new service will differ from Google in that it will add human editorial judgment to the selection of ads for content pages. In comparison, Google's service relies on technology.

There are many fronts they can beat Google on:

• open revenue sharing policies

• unlike AdSense, they could actually enforce some legitimate quality standards - which may be likely if they put a bit more human interaction into the system
• more flexible, offering XML feeds or customizable ads instead of making people use arbitrary ad blocks
• Allow advertisers to run various ad copy lengths.
• Allow advertisers to pick what sites they want their ads to appear on or block.
• Better reporting of where ads are being displayed.

It looks like some people are already testing the new network. Earlier Oilman mentioned the Yahoo! context ads on Women's Finance, and looking around, they also appeared on Mom's Budget. I wonder what sort of revenue sharing Yahoo! is offering.

Yahoo! quickly needs to expand their inventory before they lose their partnership with MSN to avoid becoming a second tier pay per click engine.

I looked around and a few of the search related blogs, like Jeremy Zawodny, JenSense, and SE Roundtable were also displaying ads. Some of the publishing partner ads looked a bit botched. The ones on SE Roundtable were frequently off topic and cut off. I mean, how compelling is this ad:

Contraxx by Ecteon
Providing premium contract...

I know that as a user I probably would not click that, if I was the site owner I would be angry for wasting my screen space on that, and if I was paying for that advertisment I would be angry about that ad wasting my money. Why not just use shorter ad copy instead of cutting it off?

How can Yahoo! even think those chopped up ads are useful? Didn't they do some sort of testing on the system? How can an editor think that above six word ad is anything other than complete garbage?

Some chopped ads may send the wrong branding message and work to destroy brand value. Not good, IMHO.

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Yahoo! Search Marketing Workbook:
They never had the manners to redirect the old link, but Yahoo! have finished rebranding the old Overture Workbook. Yahoo! Search Marketing Workbook [101 page PDF]

Google PageRank Update:
Not that it matters much, but Google has recently updated toolbar PageRank

Google AdSense TOS:
have been updated

Google Jobs:
creative way to apply

Google AdSense Targeting:
Interesting to see ads for SEO products on cached copies of lyrics pages

Google Patents:
Google Patent App: direct navigation to specific portion of target document (from SEW forums)
Google Patent App: Systems and methods for improving search quality (from SEW forums)

bonus research from Cornell: Optimizing Search Engines using Clickthrough Data [PDF] (from SEW forums)

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Yahoo! is leveraging their knowledge of the web to try to increase activity at Hot Jobs.

Searching using the job engine at Hot Jobs now searches various job posting sites accross the web, which could increase Hot Jobs exposure, but could also cause their listing fees to get marginalized as people could opt to list jobs at some of the smaller databases that will now get more exposure. I believe Craigslist offers free job postings. If Hot Jobs searches those types of sites will their business model erode?

Monster.com has been doing fairly well in the market the past few days, due in part to analyst upgrades. Not too long ago they announced their founder was leaving to start a secret project which Monster.com is also backing.

When will Google creates vertical searches for things like jobs, and how open they will be? How many vertical markets will general search engines create and destroy as search advances? It will be interesting to see how this plays out.

From John, who also points out a couple other small players in the job market.

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En Espanol Por Favor:
Univision now powered by Google.

Share Your Searches:
Yahoo! Social Search. SearchEngineWatch has a writeup on it as well. Search personalization is going to be huge.

Mobile Search:
T Mobile partners with Google

BONN, June 29 (Reuters) - Deutsche Telekom's (DTEGn.DE: Quote, Profile, Research) mobile arm T-Mobile will use Web search leader Google (GOOG.O: Quote, Profile, Research) as the starting point for surfing the Internet on its mobile phones to promote Internet usage, T-Mobile said on Wednesday.

The mobile partnerships are going to be huge.

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Yahoo! DMCA Policy:
bogus, removing sites without ANY sort of notification. They really ought to work on that. (from TW)

Bad Copywriting Advice:

You can also use copy from the site (no links), like the section where it says, "The only current SEO Book on the planet. Buy the industry standard #1 ranked SEO Book. What do the search engines think?" Etc.

Especially copy on this page:
http://www.seobook.com/buy-now.shtml

How can a copywriting professional offer such advice on an open forum?

Google AdSense Feedback:
Questions for AdSense...

• Why are many WAREZ sites use AdSense as a business model?

• Is it proper to use the AdSense spam report feature on WAREZ sites?
• What if Google ignores that feedback?
• Is Google telling webmasters that stealing is fine, and they support fraud?
• Do they want people to run clickbots on their system to get them to actually accept feedback?
• Are clickbots and other scam software products the only way to force quality into the AdSense program?

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Brett Tabke interviewed Tim Mayer. Tim think feedback from webmasters is useful in helping them keep up with indexing issues. They include publishers in their mission statement.

Spoke briefly about My Yahoo!, Yahoo! Subscription search, and Yahoo! Mindset.

The human feedback from people blocking or saving sites will be one of the biggest things that will effect search quality in the next
few years. PageRank has been around for a long time and has become heavily manipulated. Tim says that there has to be a better way.

Sees the problem with local search as getting small businesses to want to make information available. They made it free to get a local
website on Yahoo!.

Yahoo! Search itself is one of the most underutalized products Yahoo! owns because there are so many other features offered on the home page. Tim also mentioned the Yahoo! Search Developer Network, recommending people pull their linkage data and rank check queries from there.

Brett asked what are the biggest things you are fighting right now. Tim said he prefered to focus on the possitives. He mentioned that
Yahoo! has been winning RustySearch relevancy challenge. One problem many engines have is finding and indexing new content.

Looking for a manager for AltaVista and AlltheWeb. Feel free to apply. Each has a slightly different userbase and slightly different
indexes and relevancy algorithms to accomidate that.

Yahoo! has over 60% marketshare in Japan.

Good to get feedback from friends prior to sending a site to a search representitive.

Not sure whether or not or how they will use the feedback features to help sort relevancy. If the signal is good enough they want to
use it. Many of the feedback features are designed to help people find stuff they had found before, which may have got hidden in the
index dring a relevancy shuffle.

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Free Web Concert:
Amazon.com 10^TH anniversary 5PM Pacific today on the 17^TH of next month - Bob Dylan & Norah Jones, Hosted by Bill Maher

20 that Made History:
Fortune Article

Still Not Dead, YET:
LookSmart Solutions for Publishers - the new offerings seem a bit confusing and grab bag like, why not launch them one at a time like...

Yahoo! Subscription Search:
search through subscription content, such as Financial Times & The Wall Street Journal.

It will be interesting to see how they integrate that with regular search, and how much of a push they make at integration. from TW

Internet Geography Project:
interesting. Marcia linked to it in a SEW thread recently.

A Bit Rich?
article about natural link development from a person who runs a network that sells off topic bulk cheap links sold by PageRank. hmm.

Purple:
What's the Matter with Kansas?

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SEMphonic:
New SEO competitive analysis tool. I have not tried it, but it seems similar to Adgooroo.

Bundles:
of fun & software. Google Toolbar bundled with WinZip

Washington Times:
switched from Google to Yahoo! Search.

Relevant:
EFF Legal Guide for Bloggers <-- I need to take a peak at that.
http://sethf.com/infothought/blog/archives/000859.html

VoIP:
Yahoo! buys Dial Pad. they also bought Blo.gs

WordPress vs MovableType:
Jeremy Z switching to WordPress. surely thats not a good thing for MovableType. Also, why is the Yahoo! Search Blog using MovableType instead of their Yahoo! 360 or whatever?

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PageRank:
goes missing from toolbar. Brett Tabke said it is just a temporary glitch though.

Google Engineers:to appear at the New Orleans WMW conference

Does Reciprocal Linking Work?
Recently I saw the Blue Gecko SEO forums ranking at #10 for SEO. Most of his link popularity looked like it was from link trades associated with his webmaster resources directory. The reason people say link trades do not work are mostly because:

• they are usually slow and expensive to build if you do not outsource or automate

• most people exchanging links in bulk are not doing so with quality sites

DMOZ Weighting in Yahoo!:
I created a one page site about Effexor which is listed in DMOZ. I have not built any other linkage data, and it is ranking in the mid 30s for Effexor out of over 7,000,000 sites.

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Yahoo! Mindset is a recently launched search tool from Yahoo! which allows you to customize your search experience to add bias toward comercial or research type resources.

When Google update florida occured about a year and a half ago some people viewed it as a way to bias the results to non commercial or informational type listings. If search engines can train users to use the search resuls for information and ads for commercial sites then that could do a large bit to change the face of SEO.

Combine that idea with:

• most searches being unique

• the longer and more unique queries typically have higher conversion rates
• giving away information builds credibility (in linkage data, consumer trust, & karma)
• building communities builds an abundance of content

and you can see why / how people without much money can compete with large evil megacorps by building up from the bottom and working their way toward the middle.

I may be beta testing a new SEO tool this week. Trying it out will be free. More on that later :)

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Google Hijacked in Google:
Official Google AdSense site bit by a meta refresh. hmm. Low quality site? more at ThreadWatch

For those who spin all the ethics stuff, do you think Google knew of the problem and was lying when they said it was no big deal? If so, is it ethical for them to tell blatent lies? If not, how is it that SEOs know more about their search engine than they do and they generally disocunt the whole concept of SEO?

Yahoo! Q Challenge:
whats up with a $5,000 prize - that surely is not much payout for the value they could create with that contest. I might need to create a similar marketing program for myself. hehehe

Exalead:
Michael Nguyen posts about some of their search features.

Novice Spam Tool:
I have not tried it, but someone promoted this site http://searchpr.info/test.php, via forum spam of course.

Yahoo! Public Site Match:
Nothing more than a PR stunt? It sure smells the part. A while ago they promoted that program a good bit, but it sure is hard to find information about it nowadays.

Masochistic Behavior:
reading IHY forums. I don't know anywhere else where a single comment can return pages about what a horrible person you are. SEO is doomed. We are all evil. hehehe

Lots of good ones in that rant thread, but one of my all time favorite Doug quote:

Most journalists I know of at least fall on one side or the other.

Another scary thing with that thread is I find myself agreeing with Glengara!

Open Source Rank Checker:
I have not tried it, but a friend pointed me to this software. I am not sure how it plays with Google, since they have been blocking some automated software.

OPD Should Close Shop?
Danny Sullivan weighs in on the ODP's recent site submission status closure.

Black Market Porn:
UK bans selling porn DVDs over the web. UK prostitution market to soar ;)

Funny:
There is a website that qualifies you and prints out your ordained ministor certification in under a minute. A person today tried to justify me giving away my business model to them because they spent the minute to print one out.

Evolution of Yahoo! Search:
article about Yahoo! creating their search service. thnx to RC

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Corporate Search:
Google launches desktop search app for businesses

Google Inc. on Wednesday launched a corporate version of its desktop search application. The Google Desktop Search for Enterprise allows employees at companies to search for information on their computers. The free, downloadable application is based on its desktop search tools introduced last year. Google said it collaborated with IBM on the program, which is able to search IBM Lotus Notes messages, among other features.

AdWords Blog:
Cornwall notices a new AdWords blog.

Yahoo! VOIP:
new (Beta) Messenger allows calling over the web from messenger to messenger

Media RSS:
info from Yahoo!

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Spam Tools:
Ploppy gets evil

Paul Graham:
I think I link to every article he writes. his latest: Hiring is Obsolete, which says if you are the young & motivated type you can let the market determine your value by starting a startup instead of going to work for mega corp for lower than market value wages.

Free Book:
JenSense spots a new AdSense advertisement video which offers a free copy of Building Your Business with Google for Dummies.

Kansas City:
here I come. says Google Local ads, they are now advertising on radio and in the news paper.

Stock Market:

• Dell put 99.5 million in Red Hat Linux

• NewsGator Buys FeedDemon
• THK (Think Partnership - runs the largest SEO firm) down like 15 - 20% on the day.

Yahoo! Adds Trends to Concept Analysis:
Barry notes a Cre8asite thread about a new Yahoo! patent. I have not read it yet, but Bill states:

Amongst other things, the patent application begins to explain how MyYahoo! information might be used to help the search engine create search results.

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Search Engine Spam Workshop:
List of some of the presented papers. I will likely review some of those pretty soon.

What Every Good Marketer Knows:

People are selfish, lazy, uninformed and impatient. Start with that and you’ll be pleasantly surprised by what you find.

more from Seth

Mobile Social Software:
Google buys Dodgeball.com. see also: The Significance of "Social Software"

New Google PR Blog:
Marrissa Mayer's blog

If Search Engines Could Read Your Mind:
an interesting article by Chris Sherman. here is an exerpt:

We'd much rather waste time scanning results and clicking back and forth among less-than-useful pages than craft a really good query or use search refinement tools.

But while we're doing this, the search engines are observing our behavior, and learning from our fumbling activities.

SEO Press Releases:
a fun one :)

The relevance of "relevance":

• thread at SEW

• NanoContext
• RustyBrick rates search relevancy, although the data might be biased by the people who take the test (likely SEOs) here are some early results

Yahoo! Music:

Visitors to Yahoo's Music Unlimited will pay $6.99 a month for access to Yahoo's 1-million-song library. That's less than half what Napster and Real Networks' Rhapsody charge for similar services that permit the transfer of songs to portable music players. source

FindWhat:
down to $4.30 per share. other small search providers continue to hurt as well.

Gooooogle:
outgrowing coolness and forgetting their core products?

War a theme for everything?
New UK based search blog by Neutralize: Search Engine War. BTW, the new Legos Star Wars video game is amazing.

Time Management:
Creative Commons flash file

SEO Multitool:
GoLexa (sorta like a combination of Google & Alexa data with links to other stuff like WhoIs & IP Address) from Fantomaster

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Privacy:
Google Web Accelerator takes your data, and shares it with others?

Block Google Accelerator:
courtesy Fantomaster

Click Fraud:
search engines leave advertisers in the cold lurch. Lurch is a cool word.

Block that Channel:
Google AdSense allows channel blocking

Stop:
Collaborate and listen, Ice is back with his brand new edition SEO Inc, being cool like Vanilla Ice, sends out a cease and desist letter.

New SEO Tool:
SEO Browser

Audio Search:Sounds like Yahoo! may be first to market

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from Eweek

A Yahoo Inc. spokeswoman confirmed this week that the company's search-marketing division, formerly known as Overture Services, has started testing graphical banner ads displayed based on their relevancy to a Web page's content.

"We're always looking at ways of enhancing our services," Yahoo spokeswoman Gaude Paez said. "There are a number of things we're looking at doing [in search advertising], including tests we've begun for putting sponsored listings in a banner, graphical format."

The test is running on Yahoo's network of sites, rather than on partner sites, she said. The ads are dynamic, initially appearing as a banner ad and then transforming into a sponsored link.

She declined to provide further details about Yahoo's plans for the graphical, pay-per-click ads.

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Needed:
Danny Sullivan writes Worthless Shady Criminals: A Defense Of SEO

Decry a particular SEO tactic, if you want -- but don't decry the entire SEM industry as being rotten. If you want to do that, then here are some other stereotypes you'd also better buy into:

• All car salesmen are crooks

• All lawyers are crooks
• Teachers teach because they can't do
  
• Bloggers don't check facts

• [Insert Race/Culture/Nationality Here] is [Insert Derogatory Comment/Stereotype Here]

Ask Jeeves:
Profits increase 35%

Yahoo!:
Think Big contest gives away 10,000,000 Yahoo! ad impressions. I think Jeremy Z should win with the Viagra Rolex Watches.

Yahoo! also thinks small. Cutting up ads on stored My Yahoo! web pages. Webmasters are already complaining about how My Yahoo! stores web pages.

Charity:
Google foundation may invest in for-profit firms. Am going to apply for a grant soon. Will let you know how it goes :)

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Quickly on the heals of Google's personalized offering, Yahoo! offers a search storing system.

My Web allows you to import your bookmarks, unless...

My Web currently does not support bookmark import from this browser.

We currently Support Internet Explorer Favorites and Yahoo! Bookmarks.

We are looking into extending support for additional browsers soon.

Some of the interesting things from this new offering:

• Save an exact copy of any page you like - from Yahoo! Toolbar or directly from your search results

• Searching across full-text and your notes enables instant retrieval
• Create categories for your saved pages - travel, projects, events
• Share your favorites with friends and colleagues - via email, IM, and RSS
• Accessible anywhere, not just from your own computer
• Save both an exact copy and a link - the content you save will always be there when you return

Not sure how appealing it is to webmasters for Yahoo! to be storing dated cached copies of web pages. What happens if your content was incorrect and you later change it? What happens if your advertisers change? Google autolink really shafted webmasters, and it appears other search engines will only follow suit.

It looks like they are also using this launch to promote their toolbar (which for some reason beyond me still lacks a connectivity measurement). The toolbar will make it quick and easy to save pages.

The social / sharing concept is rather interesting, and is an area where Yahoo! seems to be well ahead of Google. I also believe that Yahoo! only store things you request to be stored, while Google stores whatever you click on when logged in. Google later lets you remove things if you want to. Unlike Google, Yahoo! also stores a cached copy of each page that you chose to save.

I have not tested this out yet, but I will start playing here soon :)

I am fairly certain these bookmarking and sharing system are going to open up many new creative ways to spam.

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