There is nothing too exciting about the functions they are introducing they are all available on either Google or MSN already, but they are the first to introduce them all in one place.  Google has geographic targeting and adscheduling, but no demographic.  MSN has the demographic targeting (for what it is worth).  But now Yahoo! will have them all in one place, and their additional volume over MSN should make their demographic targeting more useful than MSN’s has ever been.

Its nice to see Yahoo! pushing forward with releases like this to boost their search offering as towards the back end of 2009 it appeared they may have been giving up the battle in search engine marketing.  The functions arent yet available in Yahoo’s Search Marketing Center but it will be interesting to see how effective they are once they are launched.

As reported in media post, Yahoo has come out on top in a case brought against them by Heartbrand Beef, of Yoakum Texas.  Heartbrand, who claim to be the only seller of Akaushi beef in the US, didn’t believe Yahoo! should allow their competitors to appear on the keyword “Akaushi” as it was misleading to their searchers and of the products their competitors provided.  This would have been an interesting judgment had it gone the other way.  It is different to other trademark disputes of past or present as it wasn’t actually a trademark or brand term owned by Heartbrand, just a product exclusive to them.  I can’t honestly see how Heartbrand thought they were going to win this case but the result does go to show that the search engines are covering themselves for any such cases through their practices and T&Cs.  Google, Yahoo and Microsoft aren’t stupid, they aren’t going to open themselves up for potential legal backlash through the changes they make to policies, they are going to be pretty sure they aren’t liable before making such as Google’s most recent changes to trademark bidding.

This is not the first time the search engines have come out in battles such as these, and it certainly isn’t the final say in the argument over brand and trademark infringement in paid search.  But the more cases like this which come out in the search engines favour, the less chance there is of one going the other way, which in turn means less companies will be tempted to try their luck in the courts.

I predict in 12 months trademark and brand bidding in PPC will just be a common practice, give it 2 years and search engine marketers will be reminiscing about the good old days when there was no competition on brand terms and you got all the clicks for next to nothing.

Yahoo!

Yahoo! announced this week that it is shutting down its content network, a move which was met with nothing more than a shrug by the search engine marketing community, but one which could signal that Yahoo! is looking to cut back on its less profitable areas.

Yahoo shuts down content match in the UK

Microsoft

Rumours are rife that Microsoft are set to announce job cuts in the next week, with some expected on the search side of the business.  This is unsurprising considering the disappointing growth of Live search and the perceived lack of focus in this area, perhaps they are set to rely on the Yahoo! workforce and are giving away something about the merger rumours!?!

Microsoft Job Cuts May Come Next Week

Google

Surprisingly it is Google that appear to be making the most cuts, with the announcement it is cutting 100 recruitment positions (1% of the company) and shutting down 3 engineering offices.  The staff on the engineering side will be given the option to relocate but you would think a large proportion of them will also end up redundant.

Google have also announced the removal of a number of their product offerings and the discontinuation of development of a number of others as they look to focus on the products that earn them direct revenues in these difficult times.  The affected Google products are:

•    Google Video
•    Google Catalogue Search
•    Google Notebook
•    Dodgeball
•    Jaiku
•    Google Mashup Editor

Google to lay off 100 recruitment staff

Google closes a number of products

So what does this say about the confidence of the three biggest suppliers of paid search advertising?  It could be seen as good business sense on their part, sorting the wheat from the chaff so to speak and focussing on profitability in tough economic times.  Moves like this however can only result in Google extending their lead in the race for search engine supremacy.  The optimist in me would like to see Yahoo! or Microsoft being aggressive in a  push steal market share in the downturn, but maybe they are both resigned to the fact the only way forward is to join forces.

2009 is set to be a tough year for us all; some will fall, while others will prosper at their expense.  At the moment it appears even the search engines are jockeying to be in the best position as it appears things are going to get worse before they get any better.

An illustration of how click arbitrage works is below.  Basically the website owner buys low cots clicks from long tail search works such, for example uk secured loans company, then displays to the user a page of search results for a similar, bu more expensive keyword, e.g. secured loan, as the publisher they get a percentage of click cost from the search engine whose results they dispay, and so long as CTR is at the right level, they make a profit.

Apparently though, it is still around, and some people are still able to make it work.  In a list of the December 2008 top advertisers by search engine, ranked by ad impressions, the number one Yahoo! Advertiser was business.com, the business directory site who’s direct source of income is the Adsense links it displays in each of its categories.

If business.com are making a profit on this activity, and you would assume they must be to appear in the list, they have got to be one of the last click arbitrage sites out there.  Many companies use PPC to drive page impressions and ad revenue but very few are still acting as middle man in this way and selling on the inbound traffic for a profit.

It also bring into question the solidarity of Yahoo!’s client base.  If their top advertiser, admittedly by impressions and not spend, is a business is built on this model what does it say about their future as a PPC provider.

The changes in Google’s gambling policy have already removed Yahoo!’s one advantage in the PPC stakes, and no doubt significantly hit its PPC revenues as gambling companies shift funds across to their Adwords accounts.  And now this announcement saying that one of their biggest advertisers is an affiliate!  It doesn’t fill me with confidence that they are going to be providing any sort of stiff competition to Google in the near future.

For me this is further evidence that a partnership/merger between Yahoo! And Microsoft is the only way true competition for Google is going to materialise.

It looks like the only way anyone is going to mount a serious challenge to Google and a combined effort, either through partnership or purchase would see the search experience of Yahoo combined with the technical know-how and product development and of Microsoft. It will be a big challenge to catch Google and it will take number of years to get there but if a deal goes through in Q1 it is set to be an interesting 2009!

NMA news story

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.

What I found when I searched for virus protection specialist bullguard were notifications in the natural search listings marking the site which had potentially dangerous downloads and spyware potential.  The site in question was Kazaa which was listed twice in the SEO results, both listed accompanied by the message “Warning: Dangerous Downloads“.  This is the first time I have ever seen this warning before in the search results and I would be interested to find out whether it is a manual label on specific sites or if it is picked up automatically in some way.  Either way it is great for the user to see such warnings and catastrophic for the site as I certainly now I would be steering clear of clicking them.

yahoo show spyware warnings in seo results

This is a strange move by Yahoo! who purchased Kelkoo for $576 M just 4 years ago.  With comparison engines a key element of unviersal search and Google placing more and more emphasis on the product search with the introduction of plus box functionality in PPC the sense of this move by Yahoo could be questioned.

Whilst they may maintain they still have access to the functionality and you would hope this is part of the deal.  I do worry what happens in the future if the relationship sours.  In the current economic climate Yahoo will be happy to relinquish the overhead but it may come back to bite them in the future if they go down the same route as Google has.  What do you think?  Shrewd move to cut costs, or mistake they will regret in the future?

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.