Google-Yahoo deal may up Yahoo`s pay-per-click ad rates, search firm says
Yahoo’s proposed search advertising partnership with Google could raise the average price of a pay-per-click ad on Yahoo by 22%, says search marketing firm SearchIgnite. But the impact on a given retailer will depend on the kind of search terms it buys.
It also will depend on whether Yahoo pursues a strategy of maximizing revenue, which would mean always choosing a Google ad if it would generate more money for Yahoo than bids through Yahoo’s own advertising system.
But assuming Yahoo does seek to make all the money it can, Yahoo ad prices will go up because in many cases it costs more money to advertise on Google than Yahoo, SearchIgnite says. However, the impact varies with the kind of keyword an advertiser buys, and the position on the search page, SearchIgnite concluded from an analysis of 12 million clicks across 15,000 keywords managed by SearchIgnite technology across both Google and Yahoo.
For instance, very specific but not frequently search-for terms—called “tail terms” in the study—tend to be more expensive on Google. Comparing the same term and position on the two search engines, such terms were 20% more expensive on Google in the third position on the page and 35% more in the fifth position. These “tail terms” offer Yahoo the best opportunity to increase revenue, and Yahoo says it would primarily rely on Google for ads on these less common search terms, the report says.
For more commonly entered “head terms” Yahoo is more expensive for the top three positions and Google for lower positions. Yahoo could earn significantly more revenue by outsourcing to Google sales of ads for such terms for lower positions, SearchIgnite says.
When an advertiser bids on a term that includes its own brand or product name, Yahoo is more expensive for the top position, and the two search engines average about the same for the next two spots. Below position three Google is more expensive.
“While average keyword pricing on Yahoo will increase,” SearchIgnite says in its report, “projecting the actual increased cost for a given marketer is highly dependent on the proportion of spending across the three different types of keywords analyzed and the ad ranking on the results page.”
SearchIgnite says it manages more than $350 million in paid search ad spending annually.
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