This week Yahoo’s new quality-based pricing will launch. Unlike what the title suggests though, the quality-based pricing is intended to charge an advertising less for clicks from “lower quality” websites within Yahoo’s distribution network.
Therefore, the change really is about “quality-distribution pricing” versus quality-based pricing which actually went into effect back in February where both bid amount and ad quality determine your ad’s rank (and click cost.) Yahoo states that,
“Quality” is calculated based on conversion rates and other measurements of the ability to deliver more interested and valuable customers to you from particular distribution partner sites.”
The “conversion rate” aspect seems troubling. Where are they getting the conversion rate? Since conversion rate is calculated as total visitors converted into actions who is determining the action, the landing page component (that play a significant role in conversion) and conversion by keyword. This change seems potentially advantageous from a cost perspective but overall meaningless to an advertiser. With a lack of control and measurement it doesn’t seem to empower an advertiser to any degree.
Yahoo also states that a low quality click will receive a discount automatically. Unfortunately this seems to indicate that the advertiser may never know which websites are perceived as low quality by Yahoo against their landing page. I am not aware of Yahoo’s plans on providing a report that provides some measure of which sites produce low quality and triggered the discounts. Therefore I find little real advantage to advertisers. The change seems to be more of an effort for Yahoo to retain advertisers as they spend more money in Google AdWords.
The question is - is there any real value to an advertiser through Yahoo’s “quality-based pricing” enhancement?
Posted on June 8, 2007
