Y! Search Marketing - Going Google-style

YSM is *certainly* going to change its formula to factor in CTR; as much was said during Yahoo's most recently quarterly investor conference call. During that call Yahoo management said that the new bidding system would be released sometime in the first half of 2006, but that the benefits to Yahoo's revenues would not really kick in until the second half of 2006.

On that topic, I'm not sure many advertisers have considered the ramifications of this to their YSM campaigns. IMO (and note that I'm with Efficient Frontier so my viewpoint is that of someone who stands to benefit from the below) any firm using a rules-based bid management tool on YSM is going to have to make sure their bid management vendor has a strategy to be able to continue managing spend on YSM.

Rules-based systems were built with bid position-based systems in mind, and when YSM adopts AdWords' more opaque style, rules-based systems will cease to work effectively. AtlasOnePoint, Did-It, Performics, Overture's own Search Optimizer, KeywordMax and over a dozen other rules-based bid management systems will need to be significantly modified/rewritten in order to be able to effectively model the impacts of CTR, ad quality, and maximum CPC/effective CPC on keyword performance. My suspicion is that a couple of them will make the transition, and the remainder will have to hope their clients are unaware of this.

Many of you have probably already seen how ineffective rules-based systems are in managing to revenue *and* profit goals on Google AdWords; as someone who talks to large ppc advertisers all day long I can't tell you the number of times I've heard advertisers say their rules-based bid mgmt solution doesn't work on Google AdWords. Now imagine the same applying to YSM (and MSN who will also factor in CTR in 2006) and you have a situation where virtually every firm offering bid management stops bringing anything more than administrative value to the advertiser table.

Should be a fun 2006!