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?
I don't. The three main reasons are
They are losing marketshare daily. Google has a stronger search technology and search related brand, and the next version of IE is going to integrate search into the browser. Even if MSN loses most of the associated browser distribution deals they will still drive up the traffic acquisition costs for those who win them, and since Yahoo! has a less efficient marketplace than Google they are not going to be able to outbid Google.
Google is already busy taxing noise out of their ad network when Yahoo! is just fighting to keep up with pricing, let alone creating easy account management tools.
Yahoo! is more cautious with trademark protection in search ads. Since branded terms are some of the highest converting and most valuable terms that choice probably costs them a fat packet of cash.
Caveman, one of my best friends in the biz, is great at picking up the high level changes (and maybe that is why he got the nickname algo guy). He made a couple great posts in a WMW thread about the update
Here he talks about filtering out the most appropriate page
Odd. I see orphaned pages (i.e., abandoned; not doorway pages) - with NO inbound internal or external links any more - ranking on page 1 of numerous SERP's. Don't think I've ever seen that before. ... They seem to be filtering out the best sub page to show for a specific search (e.g., "red widgets") and instead are now showing a page above it or below it or beside it.
When I mentioned Google ranking a home mortgage type page for a consumer loan (a few weeks back in a rant post) that I am now seeing the exact same page rank for the exact same query in Yahoo! (not due to any type of spam, but due to algorithms that are ranking page B for having navigation related to page A on it - see DaveN's post about a recent Google non-relevancy fiasco).
I am seeing some sub pages rank for things you would expect the more authoritative home page to rank for, and in other cases I am seeing the home page rank for rather specific queries where far more relevant sub pages exist.
I am seeing the move toward promoting authoritative domains in Yahoo!'s SERPs in general. Not only is the trend visible as a general rule of thumb, but I also have a crusty old authoritative domain. I extended the domain out from its initial focus into related higher margin fields. I have not built up the authority on those new pages yet, but they ranked well in Google due to crustiness and high authority links to the site in general. They also ranked well in MSN due to on the page optimization. The site was not getting much love in Yahoo! until this algorithm update. The love (and increased earnings) are likely due to Yahoo! placing far more weight on core domain authority and applying that throughout relevancy scoring for all documents on the authoritative site.
Here Caveman talks about Yahoo!'s shift away from a literal MSN type algorithm to attempting to move more towards a more elegant link based Google type algorithm
What if, for example, Y! substantially altered the way that links factor into the algo: Both from a quality and quantity standpoint.
Y's algo used to be much more onpage and kw oriented. Last year that began to change. Links became more a factor.
In this new update, links are again, IMO, playing a significant role: Both the quality and quality of links. Y seems to be exploring ways to push authoritative links more to the fore.
Brilliant stuff Caveman.
As a marketer, I think Yahoo! shifting toward a sitewide authority type algorithm that tries matching natural text is a big deal since it leaves MSN as the last literal type search algorithm. The current Y! algorithm hints that Yahoo! is willing to throw a bit of paid inclusion revenue in the trash can if it leads to more relevant search results. Within a year I wouldn't be surprised if
Yahoo! solves their guestbook and blog spam link problems (and some of the other low quality link issues)
common forum questions about things like keyword density and the like are replaced by people talking more about spreading out your keywords, writing naturally, and using semantically related phrases
many people trade websites instead of just buying / selling / renting individual links
about 100,000 free service sites pop up that are nothing more than link schemes (via stuff like add our link to your site with this badge or whatever)
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?
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.
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.