February 28, 2007, 12:00 AM

Yahoo alters search marketing scene by becoming more relevant

Marketers wondering where their Yahoo paid search ads went may have to take a harder look at how they handle search engine marketing, because Yahoo Inc. has joined search engine rivals Google Inc. and Microsoft Corp.’s MSN in basing rankings of paid search on a marketer’s overall relevance to keywords

Internet Retailer

Marketers wondering where their Yahoo paid search ads got off to may have to take a harder look at how they handle search engine marketing. That’s because Yahoo Inc. has joined search engine rivals Google Inc. and Microsoft Corp.’s MSN in basing rankings of paid search ads on a marketer’s overall relevance to keywords.

“In the past, marketers could bid on a particular position in Yahoo rankings, but now it’s something of a black box,” says Kevin Heisler, search marketing analyst at research and consulting firm JupiterResearch. “You don’t know where your ad will run within search results.”

And like Google and MSN, Yahoo isn’t saying exactly how it determines relevancy in the new Sponsored Search, more commonly known by its working title, “Panama.” But the search engines are known to apply an algorithm that takes into account the number of clicks on an ad, thus presenting in a more prominent position ads that consumers, by their clicks, said were more relevant to their searches.

Yahoo’s change has been long anticipated in the search engine market. “This absolutely has our support,” says Kevin Lee, executive chairman of search marketing company Did-It.com. “We’ve been waiting a long time for Yahoo to make this move.”

The launch of Sponsored Search hasn’t been without new challenges for marketers. Among the transitional problems search marketing company Oneupweb experienced were characters being dropped from ads, words being dropped from headlines, and mis-matches between keywords and ads, says CEO Lisa Wehr. That resulted in additional effort to ensure all campaigns were being translated accurately into the new Yahoo database. “They’re really minor nuisances,” Wehr says. She adds that Yahoo staff has been responsive in helping deal with problems.

Scot Wingo, CEO of e-commerce services provider ChannelAdvisor Corp., says his company created a quality assurance program to avoid such problems. The program loads terms and relevant data into Yahoo, then pulls the data out of Yahoo and compares it with the original. ChannelAdvisor has experienced no data problems, he says.

In addition to algorithms that rank ads based on relevance, the new Yahoo Sponsored Search allows marketers to insert a keyword phrase into an ad’s headline and test up to three variations of ads for each keyword, with the winning variation moved into rotation more and more. “It’s a good thing,” Wehr says. “Ultimately it makes Yahoo more like Google, and the interface to Yahoo will be more intuitive if you’re used to using Google.”

Heisler of JupiterResearch adds retailers need to ensure their bid management tools are designed to handle the new sophistication in Yahoo’s search marketing service. “Vendors who sell bid management tools will have to update their own algorithms,” he says, “to reflect the way that Yahoo’s Panama places ads.”

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