Why Yahoo Doesn't Monetize As Well As Google
This will be a post that I refer to often because it lays out the data on why Yahoo's monetization trails Google. I've written about this a lot but I've never backed it up with data the way Seobook has in this post. It references Efficient Frontier data on traffic syndication, clicks, and conversion.
I've recently talked to a lot of investors and there's this misconception that search advertising is more complicated than it really is (there really is a lot of dumb money out there). Quality traffic matters a great deal more than optimization in today's situation.
And I can tell you that some of that Yahoo syndication traffic is not pure "search intent" traffic. I'm not a pissed off advertiser ranting about this-- I dabble mostly on the publisher side.
You should read the post-- here are some highlights:
If you normalize the above Yahoo! numbers you will see that search clicks convert nearly twice as well as their syndication traffic does.
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.
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.
I realize that this Seobook post brings one additional assumption to the forefront: if Yahoo syndicates Google paid search, will Google allow Yahoo to run on their entire network or just the Yahoo owned and operated search property?
If Google allows Yahoo to run it on their entire search network, overall CPCs might dip a bit, depending on how much Yahoo's performance effects the average.
If Google allows Yahoo to run their paid feed on only the O&O Yahoo properties, then we'll see the Yahoo paid search marketplace take a big price hit. Currently, the performance on that network is being averaged over the O&O and their syndicates. If it's no longer blending O&O traffic into the mix then the quality will drop sharply.
Speaking in general, Google has been more disciplined about syndicating their paid search feed. On the other hand, Yahoo loved the incremental bump in revenues and gave out their feed to everyone who asked. So while both companies have engaged in traffic cleaning over the past couple of years, Yahoo's had a much tougher time with this than Google.
So what's the key to fixing this issue? Growing the percentage of pure search traffic. How you do that is highly debatable at this juncture, so let's just say that it's some combination of distribution, branding, and building a better algorithmic search engine. I know that everyone who has tried to switch away from Google always comes back so that says something.
It feels nice to finally point to some data and get some support here. For a long while, I felt like how Barry Ritholtz must've felt on Kudlow & Company last week-- very lonely.
Past posts:
Some Early Anecdotal Data On The Google Yahoo Search Test
Catching Google Isn't Simply About Building A Better Mousetrap
Yahoo Has A Traffic Problem- Finally Analysts Are Starting To Get It
Balance Of Power Shifts For Yahoo
Yahoo Terminating YPN Distributors Using Myspace-- This Validates Low Quality of Traffic Concerns
