Yahoo Missing the Boat

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For the past few months I’ve been getting a phone call from YPN about once a month because they’re looking for feedback. They want to know what’s going on with YPN from the publishers point of view (which is a whole heck of a lot more than I can say for adsense).

Every time they call, I tell them straight up that YPN stinks. And I don’t just tell them it stinks, I tell them how to fix it:

  • Figure out how to get correctly targeted ads. They’re always serving mortgage ads it seems, no matter what the topic of the site. It’s like they took a short cut and had some people in india go through and put a ton of words into categories. Then, they serve the category ads if the topic of the page fits under that ‘category’. So, even if the page is about structured settlements or insurance, I’m getting MORTGAGE ads!
  • Fix the ad layouts. They haven’t yet figured out how to get the ads into the boxes correctly so they don’t look very good.
  • Fix the Yahoo Search Marketing site. It’s sooooo difficult to run a ppc campaign right now, that advertisers don’t do it. Because of this, their ad inventory is super low, so they don’t have enough ads to put onto targeted web pages.

And they tell me:

“We’ve improved our targeting”

“We can’t do anything about Yahoo Search Marketing, that’s another department. But I’ll pass your comments on to them” (right…)

“Our ads look better than ever”

And they convince me to test their ads again.

I do.

They still stink!

So here’s an email I got this morning from Perry Marshall’s mailing list. Perry wrote the Definitive Guide to Adwords and is pretty much an expert on adwords.

(I love how he explains yahoo’s problems…it’s worth reading)

A few weeks ago, a Very Large Wall Street Investment

Firm with many hundreds of millions of dollars invested

in Yahoo and Google called me to schedule a consultation.

They wanted me to help them understand ‘How the sausage

is made’ and share my views on Google and Yahoo’s

long-term prospects for growth.

Back in the day, GoTo (oops, I guess they’re called

Overture now) (Oops, I guess they’re called Yahoo Search

Marketing now) had the tiger by the tail.

They built the world’s first Pay Per Click money machine

and they had it made in the shade. They organized all the

chaos of the Internet and started selling clicks. Now search

engines could finally start making some money.

And baby, did they ever make money. They thought

they were making a lot.

But then Google came along. Google showed ‘em how it

should REALLY be done. I’m not sure any company in the

history of the world has ever made so much with such apparent


You can ask any guy on the street why Google has done

so much better, and they’ll tell you it’s ‘cuz Google is just a

better search engine. And that’s true, but that’s only half the story.

The other half of the story is that they designed

AdWords to maximize the amount of money they make

on every search. Advertisers have great incentive to

lure people from the left side of the page to the right side

and click on those paid ads.

And yes, this has a LOT to do with you, as I shall

explain shortly. If you’re going to succeed in this game,

you’re going to succeed for the exact same reasons Google

succeeded. So pay close attention as I tell you what

I told the guys at the big investment firm.

You may know that Yahoo just changed the size

of their ads from 190 lines of description to 70, just

like Google.

Know why they did that?

Because Google figured out before Yahoo did that

they’ll make more money showing 10 little ads than

3 or 4 big ones. Yahoo finally figured it out too.

How did Google know that?

By testing.

Yahoo didn’t test.

Shame on Yahoo. (Shame on everyone who doesn’t

test, for they shall share the same fate.)

Well then there’s the Click Thru Rate formula. You

should know by now that Google multiplies your bid

price times your click thru rate to figure out where you

belong on the page. Yahoo doesn’t do that. Which

means Yahoo ads that get clicks don’t rise to the top,

and Yahoo makes less $ from every single search than


Now let’s say they make 10% less. Does that mean

they get 10% less business? NO, it’s worse than that.

Because they have syndication partners (MSN, Altavista

etc.) and thousands of individual sites who share the profit.

If their partners get a piece of the action, they make 10%

less too. Which means they’d rather run Google ads than

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