Yahoo Expands Paid Placement Listings

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 week.

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.

That Sponsored Sites program did not have an impact on the search results page, which is of key interest to many marketers. That’s because many Yahoo users conduct a search and access a link directly from the search results page, rather than by exploring Yahoo’s category listings. This means that getting a top listing in the search results page can bring sites substantial traffic.

Unfortunately, marketers have had virtually no option to alter their listings in hopes of getting a better ranking. Yahoo editors are loathe to alter a site’s description, unless there’s some significant factual error or change in status. This means descriptions could not be tweaked by site owners, in hopes that a rewrite would rank them better.

The Overture deal will solve this problem, at least for those with budgets. For the first time, any site can now be guaranteed a top ranking in the search results page at Yahoo. Of course, the sites must meet certain relevancy guidelines and afford to pay more than others bidding for such placement. Nevertheless, the ability to gain a top listing spot at Yahoo is bound to be a relief to many site owners.

Should you still bother paying for a regular Yahoo editorial listing? Absolutely. The $299 fee for a commercial submission is still likely to pay for itself in just a few months — if even that long — in terms of traffic you’ll receive. Get the editorial listing, for the essentially free traffic it will provide, and consider paid placement listings to plug gaps for important terms you don’t come up for.

How about change requests? As mentioned, many sites seek these, because they fail to come up for key terms at Yahoo. The new paid listings do provide a solution, but it is one that lasts only as long as your budget holds out. Given this, you might want to still seek that editorial change.

The key thing here is not to ask for a description change so that you can rank better. Instead, express it in terms of benefiting Yahoo’s users. Explain how your request will more accurately describe the site to users seeking a particular type of service. That should improve your odds.

For example, let’s say you wanted to rank well for “chinese cooking.” Unfortunately, when you submitted your description, you instead used the phrase “chinese cuisine,” such as:

“Guide to Chinese cuisine, featuring recipes and dishes.”

You might submit a change request to Yahoo like this:

“Guide to Chinese cooking and cuisine, featuring recipes and dishes.”

You’d then perhaps explain your reasoning like this:

“This change request is being made because some of your users seeking this information may search for ‘chinese cooking’ rather than ‘chinese cuisine.’ Including this additional word will increase the chances of them finding this important guide to Chinese cooking.”

That puts the emphasis on how the change helps Yahoo and its users, rather than this type of request, which is all about helping you:

“Please process this request because I can’t get a high ranking unless you add this word.”

Wouldn’t it be nice if Yahoo offered an express change program, similar to LookSmart? It certainly would, but there are no immediate plans to do this, especially with the new Sponsored Matches listings seen as the current solution to the “why can’t I rank better” question.

“We really felt that putting Sponsored Matches out there was the right thing to answer many of those concerns [about ranking better”,” Gatz said.

Gatz did say that Yahoo is “always listening” to requests for new webmaster-oriented features and that the addition of Sponsored Matches “doesn’t mean we are stopping” in terms of adding those features. So, there’s at least the possibility of an express changes options. Let’s hope the company actually moves forward with this quickly, as I think many feel the time is due.

Be aware that the Overture listings at Yahoo only display a partial description of what you provide to Overture. Only about 85 characters of both your title and description will be shown. In other words, if your title was 40 characters long (including spaces), then the remaining 45 or so characters would show the beginning of your description.

Because of this, it is essential that you make your titles snappy and attractive to potential visitors, since they don’t have the full description to attract clickthrough. Of course, that’s already been the case, given that AOL Search doesn’t display descriptions at all, unless someone hovers their mouse over a link.

The Overture listings are also only appearing at and also only to those who visit the site from the US and Canada. Yahoo sees this as a benefit, to prevent those advertisers who want only a US or Canadian audience from getting visits from those outside those countries. On the flip side, those who want to reach the entire global audience that uses are left with no option.

That’s likely to change, when Yahoo launches its own internal listing program next year. This will allow for targeting on any particular Yahoo property or across the entire Yahoo network.

Under the current deal, Yahoo could stay with Overture after April 2002. It also seems to make a lot of sense, given that managing paid listings is an incredibly difficult process. You need to have auditing controls, to watch for accidental clicks and those intentionally done to hurt an advertiser (assuming you use a pay per click model). You need to review listings for relevancy — Overture says it currently rejects about 25 percent of bids, so you can see that’s a time consuming process. Why would Yahoo, which has no experience is this particular aspect of paid listings, want to build from scratch something it can get from Overture?

Potentially, Yahoo could earn more if it did it itself. Yahoo is probably getting anywhere between 50 to 65 percent of the revenues earned by clicks off of its site, using Overture’s past financial statements about partner payments as a guide. Doing it on its own means it would get 100 percent of revenues — though it would lose a good chunk due to the overhead of managing those listings.

Yahoo says it has a better reason. Running its own program will be easier for advertisers to understand, especially for those companies who already have some type of connection with Yahoo.

“We have a strong base of advertisers who have a billing relationship with us. We really feel that by having our own service, it makes it easier and allows us to bundle services together,” Gatz said.

Just consider the situation now. A Yahoo banner advertiser, a Yahoo Store merchant or just someone paying for a Yahoo Express submission tells Yahoo that they want to rank well for a particular term. In response, Yahoo has to send them to Overture. The person then has to understand how the bidding process works, constantly monitor things to ensure they are in the top listings and be forced accept distribution in places beyond Yahoo.

Yahoo’s move to run its own system should be a warning signal for Overture. No doubt, the Yahoo deal is a great coup for Overture, in the short term. However, I and others have long been saying that Overture’s big flaw is that advertisers cannot pick and choose the sites they want to be listed on. You either run across the entire Overture network or you don’t run on it at all.

It always seemed that pressure to offer more choice would come from advertisers, who wanted control over where exactly their listings appeared. Now, it might be that Overture’s partners themselves might place it on the company.

Despite this, don’t expect Overture to change its mind anytime soon. When the issue came up at the Search Engine Strategies conference last week, Overture put on a spin that a unified distribution structure was simpler for its advertisers to deal with. So you see, Overture is really helping you, by giving you only one choice.

Such an inflexible attitude is reminiscent of Henry Ford’s quip about his Model Ts car, that customers could have it in any color, as long as it’s black. Ford was eventually compelled to change due to consumer demand, and Overture will need to also. For a service that’s 95 percent dependent on distribution partners and 100 percent on advertisers, keeping both parties happy is essential.

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