Potential Price Hikes to Yahoo Search Marketing
Posted: July 18th, 2008
The repercussions to last month’s announcement of Yahoo’s nonexclusive agreement to serve Google ads to Yahoo’s search network have been under scrutiny by many people, including advertisers using Yahoo Search Marketing (YSM) and AdWords. Search marketing companies like SearchIgnite have also been looking into the effects of the partnership on paid search campaigns.
A report released on Tuesday from SearchIgnite suggests that keyword prices on Yahoo Search Marketing will rise by an average of 22 percent. This is a significant hike to current bid prices and poses a great risk to those running pay-per-click campaigns with YSM. According to the president of SearchIgnite, Roger Barnette,
Most marketers will see their overall costs for search advertising across the Yahoo network increase, and will need to adjust their search strategies accordingly.
For some possible methods of weathering this shift, I suggest you redouble your efforts in optimizing current paid search campaigns to stretch every dollar spent. Now would also be a good time to find “the next Yahoo” by experimenting with other advertising networks.
Just to refresh, the main reasoning behind the Yahoo-Google deal is to fill unused inventory on Yahoo search pages with search ads from Google. There are appreciably more advertisers and PPC campaigns on AdWords than YSM, and this has led to a growing disparity between searches being made and ads being served.
With the new agreement, the days of inexpensive costs on Yahoo search pages are dwindling. Prior to the partnership, it may have been possible to secure a number one search spot on Yahoo since the competition was relatively low. The new injection of advertisers with proxy AdWords bids have hiked the cost of the top advertising spots on Yahoo.
Given the state of the world economy and the probability of a recession, I don’t think it would be a wise move for Yahoo to increase costs by 22%. That increase could really impact on many advertisers and cause Yahoo to earn even less revenue as a result.
Right, this will probably move advertisers from the YSM platform to AdWords. I’m not sure whether Yahoo will end up with a net loss from this deal, because they’re now monetizing a lot more of their unused inventory compared to before.
This is not a positive move as most of the Internet business advert network shares falls. Yes, I’m talking about Google. The cost increase is not encouraging advertisers, but to chase away the existing customers.