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Yahoo Expands Paid Placement Listings

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Yahoo is now carrying paid placement listings on its search results pages, rather than just within its category pages, through a deal cut with Overture (the former GoTo) last month.

When you conduct a search, the first three paid listings from Overture for that same search now appear in the new " Sponsor Matches" section of the Yahoo search results page. Listings four and five from Overture also appear at the bottom of the Yahoo results page, in the "More Sponsor Matches" area.

"A lot of people have been asking us for these type of listings for a while," said Scott Gatz, general manager of search and directory at Yahoo. "We thought it was the right moment, and so as not to waste any time, we partnered with Overture."

The deal with Overture runs through April 2002. By that point, Yahoo says it "fully expects" to have its own system of handling paid listings in place. Despite touting the partnership as a new key way that Yahoo expects to improve its declining revenue, the company refused to divulge how much it expect to earn from the deal.

Does the addition of paid listings foreshadow the demise of Yahoo as a search resource? Not at all, despite some comments you may have read in articles about the Yahoo-Overture deal.

Some perspective here is important. No one suggests that Google is "selling out" or putting revenue above user experience by having paid listings, yet both accusations have been levied unfairly against Yahoo in recent articles about the Overture deal.

Yahoo provides search for free, just as Google does. In order to provide this service, it needs to earn money, just as Google does. And how does Google make 75 percent of its money? Paid listings. Given this, why should Yahoo be dinged for doing exactly what Google does?

As long as paid listings are clearly labeled and don't supplant substantial editorial listings, there's nothing wrong with them, in my book. They provide an alternative way for users to find what they want, just like Yellow Pages listings do. They also give a search engine revenue, so that it can continue operating and providing the editorial listings that users want, for free.

Yahoo's paid listings -- like those at Google -- are clearly labeled nor pose any particular barrier or problem to web searchers. There is even a "What are Sponsor Matches?" link that explains to those concerned or interested in buying a link more about them.

In fact, Yahoo has a lower "ad break" than Google, in some cases. That's the percentage of listings in the main results area that are paid. Do a search for "casinos" or "viagra" at both places. Yahoo gives you 20 editorial listings and 5 paid listings -- a 20 percent ad break. At Google, you get 10 editorial listings and 10 paid listings -- a 50 percent ad break.

To be fair to Google, it's more common to only get a few ads, such as six for "home loans" or just two for "cars." Also, the high ad break is not a problem, because the ads run alongside the editorial listings. You can easily see the non-paid material, but that's a situation I feel is also true at Yahoo.

Yahoo has actually had paid placement listings since last February, when the "Sponsored Sites" program was introduced. The program allows sites already listed on one of Yahoo's category pages to jump to the top of the page, as opposed to the new program, that impacts the search results page.

The new Overture listings are only appearing at Yahoo.com and also only to those who visit the site from the US and Canada.

A longer, more detailed version of this article is
available to Search Engine Watch members.
Click here to learn more about becoming a member

Yahoo
http://www.yahoo.com

Overture
http://www.overture.com

How Yahoo Works
http://searchenginewatch.com/subscribers/yahoo.html

Overview of how Yahoo works, with tips on submission, for Search Engine Watch members.

Yahoo to clip divisions, lay off 400
News.com, Nov. 15, 2001
http://news.cnet.com/news/0-1005-200-7878751.html

Yahoo is reorganizing -- cutting 44 business units to six (with one of those being "listings"). About 400 people are also being laid-off.

Yahoo's Chief Moves the Company Away From Its Old Culture
New York Times, Nov. 15, 2001
http://www.nytimes.com/2001/11/15/business/15PLAC.html

Paid listings at Yahoo are just one of many efforts to diversify the portal's revenue stream, but the changes are said to put revenue before user experience.

Yahoo Is Soooo Over
Business 2.0, Nov. 16, 2001
http://www.business2.com/articles/web/0,1653,35572,FF.html

"Selling results gives off a whiff of hucksterism, of selling out objectivity for a quick buck," this article writes about Yahoo. One paragraph later, it goes on to praise Google -- which sells results and which can also make you scroll through two paid links -- "marketing garbage" -- before hitting editorial. Yahoo isn't digging its own grave by adding paid listings, as this article suggests. Appropriately done, they are part of what can ensure its survival.


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