by Richard Drawhorn
In a December post, I discussed the introduction of the new Yahoo! paid search platform called “Panama”. Yesterday, Yahoo! announced a new ranking model for the Panama platform in the United States. In this post, I’ll take a look at the changes Yahoo! is introducing into their paid search ranking methodology.
The new ranking model was originally mentioned in the Yahoo! search blog on January 23, 2007. As discussed in that post, the major change being introduced is the consideration of ad quality when determining an ad’s rank. This replaces the previous model in which the ad’s position was determined by bid amount only. The new model will potentially allow an ad with a low maximum bid to occupy the top position if it’s “quality index” is higher:
(Image from Yahoo! Search Marketing Help)
The quality index of an ad will be based on two primary factors:
- The ad’s historical performance as measured by the click-through rate relative to ad position. The logic here is that the better an ad actually performs, the higher the quality must be because a greater number of users are clicking on the ad.
- The ad’s expected performance relative to other ads displayed at the same time, as measured by the Yahoo! ranking algorithm. The quality of an ad is not independent of the ads in competition with it, and the Yahoo! search algorithm takes this into consideration.
The new ranking model for Yahoo! Search Marketing is reminiscent of Google Adwords’ Quality Score ranking model, in which clickthrough rate, historical performance, and relevance of ad text and landing page are all considered. In a way similar to Google Adwords, the new ranking system for Yahoo! should result in more relevant ads for the keywords being searched on. It should also reduce the occurance of bidding wars that often arise when ads are displayed based exclusively on bid price.
The Yahoo! Search Marketing Help documentation provides an overview of the new ranking model, along with some best practices tips to help advertisers make the most efficient use of the new ranking model. In general, the advice provided is fundamental and should be applied to any paid search marketing campaign:
- Define your business goals and set a paid search budget to meet them.
- Use relevant keywords in both ad and landing page copy.
- Create and test different ads to determine which ads are most effective in compelling users to click on the ad.
- Create and test different landing pages to learn which page(s) results in the highest conversion rate.
Conclusion
Yahoo! Search Marketing’s new ranking model for the Panama platform is a positive step in the right direction for Yahoo! paid search. The inclusion of ad quality into the ranking algorithm will result in more relevant paid search ads and a better user experience for both Yahoo! visitors and advertisers.
