The recent news of Yahoo's new terms and conditions provoked thoughts of embarrassment, confusion and awe in the interactive marketing industry. Yahoo's new "automated optimization" strategy is questionable and it's clear that the beneficiaries are not the advertisers.
In the shadow of this release, Yahoo also decided to terminate its content match program in the European Union. These decisions are raising many questions about Yahoo's future direction, and have far-reaching implications for advertisers everywhere.
Taking the Advertiser Out of the Picture
First, let's take a look at closer Yahoo's new terms and conditions and take a minute to break them down into barest terms.
The controversy stems from the following language; Yahoo "may help you optimize your account(s). Accordingly, you expressly agree that we may also: (i) create ads, (ii) add and/or remove keywords, and/or (iii) optimize your account(s)."
Although Yahoo may have been doing some of these things for 6 months now, a recent email to its advertisers has brought this new strategy to the top of everyone's minds. The very nature of updating terms and communicating to all of Yahoo advertisers highlights Yahoo's legal right to make changes to your campaigns arbitrarily.
Adding insult to injury, "you remain responsible for all changes made to your account(s), including all click charges incurred prior to any reversions being made."
Why This, Why Now?
Yahoo either has no faith in the average advertiser, or they are getting very creative trying to find a new revenue stream. They claim they want to "make our small- to mid-sized advertisers more successful," but as advertisers become "smarter" about their online advertising, we should see a shift from the do-it-yourself attitude to a managed agency solution. Google has embraced the managed discipline concept with its aggressive reseller certification programs.
Consider the following eyewitness account seeking to address the issue that Yahoo's assumptions when optimizing a campaign may or may not be in line with the advertiser. Yahoo uses click through rate (CTR) as its first metric of "performance." CTR? What happened to conversions? Last time I checked, click-throughs were a measure of traffic, a means to an end. As we all know, traffic doesn't map directly to the actual success of a campaign in meeting business goals.
Who looks to gain from this new strategy? Yahoo certainly does, if it can "optimize" campaigns to make sure an advertiser's budget is being maxed out each month. The notion that Yahoo wants to "help" its advertisers is comforting, but the way that they are trying to help is questionable.
Moving Back to European Roots
Yahoo sent another e-mail to its trusted advertisers laying out its new commitment to search, or lack thereof, as it decides to move away from the content network on Yahoo's European sites. "The decision to close Content Match underlines our commitment to focus on our Sponsored Search and Display business and to simplify our solutions to deliver a high ROI for our advertisers," according to the e-mail.
While Google is making billions of dollars from its content network (AdSense) Yahoo is moving away from this idea, and concentrating all of its efforts towards Search and Display in the European Union.
Then again, Google recognizes 50 percent of its revenue from outside the United States, where Yahoo's beyond-the-border revenue for 2008 sits at 28 percent.
Ups and Downs Come Together
From the small business doing it themselves, to the big businesses bringing their interactive advertising in-house, any advertiser using a credit card as their method of payment for Yahoo Search Marketing will be subject to this optimization process. By taking the account management and creative control away from the advertiser, Yahoo is leading some to question whether the company is willing to compromise its relationships with advertisers.
But if the program were made entirely opt-in, and Yahoo sticks with its plan of only applying these changes to smaller accounts that are not being actively managed, the results could be more positive for Yahoo, its advertisers, and its search marketing agency partners. Instead of taking away control, Yahoo would be adding value to those that want Yahoo's help.
Yahoo's advertisers who don't proactively manage their accounts might see improvements in their campaigns by utilizing Yahoo's expertise, or they might discover that managing their own campaigns properly becomes too burdensome. That realization could drive them in a direction of fully-managed services, from search marketing agencies and other partners. Either way, they should benefit from a more hands-on approach to managing their campaigns.
If they decide to go with an agency, small business owners will have more time to run their businesses, search engine marketing agencies will grow and become more dominant players in the industry, and the overall quality and quantity of ads will increase, as established sales forces and search experts take the reins. In addition, Yahoo will benefit by winning more ad dollars, since it will be delivering better ROI. A win all around.
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