Tim Cadogan Talking At Yahoo Analyst Day

Tim Cadogan, vice president of search, up now at Yahoo Analyst Day, talking
about search monetization. He starts by saying the consumer is always first in
consideration, then explains the search food chain/cycle, how questions can be
answered by advertisers. Think there are billions of offers that can be
delivered with more relevancy to make both sides, advertisers and searchers,
happy.

Five priorities:

  1. Core platform
  2. Advertiser experience
  3. Marketplace design
  4. Consumer experience
  5. Breadth and depth of advertiser experience

Priority 1

Get performance up to reduce transaction cost, which isn’t just money but
time and effort. Working to reduce this at a low cost. Scale, want millions of
advertisers with billions of offers and 10s of billions of impressions per day.
Rapid innovation, platform built to grow with new things (heard these types of
things before with organic search architecture and not happened, but we’ll see).
Need to help ensure continued support for third parties in the search ecosystem.

Priority 2

Ease of use for advertisers, give them fast editorial turnaround. Search
marketing hasn’t always been easy, so spent a lot of time thinking on how to
reveal the right level of sophistication when actually needed. Simple user gets
simple interface; advanced gets more advanced charting and options.
Effectiveness. Part of this is new ad testing to allow advertiser to express
different creative for ads until get the right ad (you know, like AdWords has).
Also better geotargeting.

Goal-based optimization. Everyone gets conversion tracking, so any advertiser
(those who care and trust to share) can have bids optimized to reach things like
cost per acquisition. Talks about "assists." How some terms get a lot of
searches like digital camera and d70 will get more conversion, so advertiser
might believe digital camera aren’t good and so only do d70. That might be bad
since digital camera might have drove or "assisted" the searcher earlier in the
buying process or funnel, until they convert with a more specific term. Says
this is a first to Yahoo’s knowledge for the industry. I think so, if you
exclude third party tools.

Shows the current system and how the new system will have a new budget
system, with a bar chart showing you what opportunity you might be missing out
on by not budgeting more. So helpful, but helpful to both sides.

Priority 3

New ranking system, with the first focus on improving the consumer
experience. Shows a good, relevant ad for talavera tile. Doesn’t show a bad
example but says it happens and needs to improve.

Shows the ad quality chart. This is pretty cool — I saw it in a briefing for
the article I did two weeks ago. Shows you at a glance ads that aren’t meeting
the quality score. You don’t know what exactly makes up that, but at least you
can more easily see which ads are at risk. Clickthrough, he doesn’t say, is a
key component.

Priority 4

Enhanced geo-targeting, pick a city, have your ad targeted to there.

Priority 5

All small business now under one person, from domains to store functionality.
On sales side, Yahoo Search Marketing and graphical sales now under one person.

Competitive stack up time. Relevancy-based ranking, ad testing, easier-to-use
system, fast editorial review, integrated analytics are all key jumps up. Beyond
this and above, visible quality scores, enhanced bidding and forecasting, a
really easier-to-use system, good geo-targeting, the implementation of assists.

When? Platform tests through Q3 this year, then deploy in US, then Q1 next
year internationally. Advertisers will also come into the new platform. The
ranking system itself won’t change until Q4 this year in the US, it’s expected,
then Q1 internationally, and designed to easy advertisers into new system.

Questions (joined by panelists):

Is there a risk bid prices might drop (me: sure, but if clicks
increase…). We feel in aggregate, the net experience is going to be better. As
for the analytic integration, Yahoo if I understood right does get some
aggregate data to use for insight but mainly aimed at helping advertisers learn
more.

Safa Rashtchy from Piper Jaffray: do you think you’ve got a new
architecture that will let you move faster
(they’ve said yes already but
they say yes again). Also said (sorry, didn’t catch name of the other panelist
saying this) this is the third generation of this type of ad system, either
third generation for Overture (if so, sure) or third generation in
Overture-Google-Yahoo (if so, disagree. MSN is more a third generation platform,
though I’ve written before that doesn’t guarantee advertisers if there’s no
traffic).

Geotargeting: Tim sees lots of potential on those who don’t advertiser
who would once they have good local targeting. Susan Decker CFO stresses this is
1.0 of the new system and so they are considering some things down the line that
their competitors might have (ie MSN and demographics).

Worried about hitting the holidays? Our advertisers say they want this
sooner.

What type of increases in monetization expecting based on testing and any
surprises from that.
Susan: You don’t really know until you have a real
marketplace, and a dynamic marketplace. Don’t expect a financial contribution
this year from the system but more next year (ie, any big benefits won’t really
happen in 2006).

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