The Digital Lookout

In a memo to its partner agencies yahoo has announced changes to its commission structure which will see it follow Google’s lead and reduce the amount of Agency commission from January 1st 2009.  It is not going as far as Google in removing commissions completely but it will see a cut of 1% for the majority of agencies but a potential hit of 6% for unlucky agencies which fall into a specific band with a potential loss of all commission for the really small spenders.

At present agencies spending between £20,000 and £79,999 receive a rebate of 5% from Yahoo and anyone spending over £80,000 receives the maximum 10% commission on search spend.  The January changes will see agencies spending between £50,000 and £99,999 receive 4% rebate and anyone spending over £100,000 9%.  This means the removal of commissions for agencies spending less than £50,000 a month and a hit of 6% for those who fall between the £80,000-£100,000 monthly spend bracket.

The announcements come in the same week that Yahoo! has announced it will be closing six European offices in the coming 12 months in a bid to cut costs.  Potentially suggesting that the two decisions are linked in a company wide profitability drive.  After all, agencies will be so concerned with losing their Google BPF that they hardly notice the Yahoo change right?

Its a disappointing step from Yahoo who could have used the Google BPF removal as a tool to grow their market share.  Either by simply pushing agencies on the message that they are still offering 10% or even making the bold move of increasing the commissions to further incentivise search agencies to use their service.  After all, they still offer 15% on display advertising placements so why not search as well?

Yahoo has been failing to eat into Google’s market share for a long time and it has been becoming more and more apparent of late that a merger with Microsoft might be the only way we will see true competition in the paid search market.  But this was a prime opportunity to steal a few more ad dollars from Google and one, in the current economic environment, they probably couldn’t afford to miss.

If Yahoo had been brave and increased their commissions, I for one would have been looking for way to spend more pay per click budget with them but now they have reduced them, I certainly wont be increasing PPC spend with them in the New Year.  I think this can safely go down as an opportunity missed for Yahoo, and could even been seen as a signal of intent not to put up a significant fight against Google in the field of Pay Per Click.

This was first announced at the Google Above and Beyond Summit in Dublin last month but it appears it has reached the UK, at least in Beta format. (searchengineland article)

The plus box on PPC listings is one of Google’s latest developments in Universal Search and aims to provide more useful PPC listings and (much like the search within a search results) allow a user to select the most appropriate page or product within an advertisers site before leaving the Google SERP.

The plus box example given by Search Engine Land is the inclusion of product listings on the expansion of the plus box along with images, prices and descriptions.  This is one of the main uses for the plus box Google is looking to introduce and is linked to a Google Base account for the individual product information.

The other use for this technology that Google indicated was the ability to show branch locations on brand terms (and location specific keywords) so that a user could see and possibly click through to the appropriate web page or even website for their nearest branch.  This again is linked to Google Base and driven by the same technology as Google Maps.

Google is starting to join the dots with their different channels with integrations such as this and it is becoming more and more important for advertisers to consider the whole Google suit as part of their strategy.  Even if they aren’t going to get much significant volume directly from Google Product Search or Google Maps, it will have an overall benefit on both their PPC and SEO campaigns as Google introduces more and more initiatives such as this.

Google announced yesterday that it was pulling out of the agreement with Yahoo which would have allowed them to display Google Adwords listings on Yahoo search results in the US.  The announcement comes in the face of a potentially lengthy and costly legal battles with competition regulators which Google has decided would “distract the from their core mission”.

In Yahoo’s response via email to it partners they reassured PPC advertisers that, whilst they were disappointed by the announcement, it would not prevent them becoming an “ever-stronger player in online advertising”.  and reaffirm their strength in certain sectors by quoted their positioning across selected news verticals.  A clear attempt to say “don’t give up on us yet!”

In a further twist, Yahoo! CEO Jerry Yang has come out and reverted on his original defiance on a sell out to Microsoft by claiming that he was open minded about a potential deal with Microsoft having been bitterly opposed to such a deal when originally proposed.  Its funny how he has changed his mind immediately prior to the Google announcement!

So its back to square one in the search engine battle for supremacy with no deals on the table and everyone working independently.  But for how long?  Yang’s announcement is bound to start the Microsoft-yahoo rumour mill off again and it is probably more likely to go ahead after yesterday but who knows?  I’m sure there will be more twists in the tail before the saga ends.

Microsoft is aiming to prove the branding influence of paid search ads by tracking the impressions and allocating them back to repeat searches, website visits and subsequent purchases.  The branding influence of search has long been debated with many believing that there is a branding benefit to be had by appearing high on PPC listings which comes as a hidden benefit to the pure direct return which is often associated with paid search channel.

True branding connoisseurs I’m sure would argue that it isn’t possible to build a brand experience, and certainly a significantly positive one, through 3 lines of text.  But the fact of the matter is that a searcher on a generic term will scan the paid search listings (as well as the natural search results) to see who is appearing before deciding which PPC ad to click.  So there is surely some conversion attribution to be had from PPC impressions which could then ultimately result in a brand term search and conversion.

This is what Microsoft are aiming to prove.  Presumably using similar technology to that which is used by adserving software, placing a cookie on the users computer upon impression which remains in place to allow the tracking of future actions.  This technology wont be able to track through to conversion without placing code on the advertisers sites but some may be willing to do this for greater visibility of the impact of paid search impressions on the buying cycle.

The timescales of such a cookie can be all important in this form of tracking in order to gauge its accuracy.  Adserving softwares track post impression conversion up to 90 days after the original viewing which is pretty excessive in my view.  this is far longer than the normal buying cycle even for a considered product and so it will be important for Microsoft and any advertisers participating to set a realistic timescale in which the impression could have an impact.

The results should be interesting and could lead to more emphasis on PPC if a branding impact can be proven.  By allocating both a direct return and a brand impact Microsoft will be hoping that advertisers will be willing to increase CPCs and inflate the cost of sale they are willing to pay, obviously resulting in more revenues for the search engine.  I’m sure most advertisers will take some convincing though so the results will have to be pretty impressive.

Google has today announced plans for further changes to be made to their quality score algorithm following the changes to the Google scoring system which took place in September.

The latest announcements as announced on the inside Adwords blog are not yet in place but are likely to be in the next week so it is considering how they may affect your Adwords campaigns.  The changes come in two forms:

Position Normalisation on CTR Influence

Reading between the lines on the release (it isn’t Google’s clearest ever announcement!) Google are going to be accounting for the position of an ad when deciding how significantly CTR should apply to the quality score.  Traditionally CTR has played a huge part in the quality score algorithm and I have no doubts it will continue to do so, but the problem with it has always been, it can be bought.  The big spenders, with the deep pockets, can afford to bid to position 1 and buy a good CTR in a short space of time.  Through this latest change Google are aiming (at least I hope) to reduce the ability to do this by accounting for position when judging what constitutes a “good” click through rate.  So for example a CTR of 3% in position 5, would be determined a better judge of quality than 5% in position 1 where the ad is the first thing is searcher sees.  This should allow for a much more level playing field for the lower spending advertisers and negate, to a certain degree, the spending power of the big players.

Changes in Position 1,2 and 3

Traditionally the top 3 positions which appear above the natural search results are determined by whether the top 3 advertisers in the max CPC x QS model had a sufficient quality score to merit inclusion in the top bar (what quantifies sufficient is unknown).  These three positions are highly valuable and get high CTR due to their prominence on the page.  What the latest changes are going to do, in essence, is to place more emphasis on ad quality and QS in this equation and less on max CPC (see a trend here?).  So that if an ad in position 1 doesnt have the necessary CTR and ad quality to appear in position one, but wins the general auction, it wont stop the ads in position 2 and 3 from leap-frogging into these prominent positions.

My general feeling is that these changes will normalise the market for the benefit of the small business PPC marketer.  Obviously Google will still make their money as a lot of clicks at a medium CPC is better than a couple of clicks at a high one.  it could also prompt the big PPC spenders spend even more as they try to achieve the positions they previously hold, win win for Google!

I expect a pretty turbulent PPC landscape over the next week so Ill be keeping a close eye on things, I advise you to do the same!