Yahoo’s Transition to Microsoft AdCenter: A Mixed Bag for Advertisers

Posted on Tuesday, December 7th, 2010 by Print This Post Print This Post

Categories - Featured, News, SEM

The approval of the Microsoft/Yahoo! search alliance was one of 2010’s most important news stories for search marketers.  And on October 27, Yahoo! announced the successful transition of all advertiser accounts to the adCenter platform.

To assess the impact of the Microsoft/Yahoo! search alliance on advertiser performance, The Search Agency conducted a pre/post analysis across several accounts from a variety of industries.  We compared performance for the last 3 weeks separately managed by Yahoo! search marketing and Microsoft adCenter (9/20 – 10/10) to the first 3 weeks after the full transition to adCenter (11/1 – 11/21).  Between 10/11 and 10/27, there was a phased migration of accounts, so we removed this transition period from the analysis.

Here are the top-line results of our analysis:

  • Impressions and clicks declined considerably, while CPCs spiked since the integration.
  • Conversion rates have improved, while CTRs and cost are relatively flat.
  • Due to lower impressions and rise in CPCs, CPA has increased 8% and conversions have dropped 10%.

Discussion

  • TSA believes impressions and clicks have dropped because Microsoft is more focused on user experience then Yahoo was previously.
    –        Fewer ads are served across all the queries compared to when Yahoo! managed the execution.
    –        Distribution partners of Yahoo are serving fewer ads.
    –        As a result, CTRs and conversion rates have improved in the new marketplace.
  • Preliminary analyses with shorter time frames and year-over-year data showed CTRs decline 18%, but that has improved in recent days.  Microsoft seems to be getting smarter about ad serving as they generate more data on user behavior with ads and match-type serving.
  • The post analysis does get into the start of the holiday shopping period for some advertisers, so seasonality probably has some impact on performance.
  • CPCs have increased as the market has reacted to the decline in impressions and positive conversion rates to try to capture more volume.
    • Additionally, Yahoo had ~250k advertisers and Microsoft had ~80k.  The influx of “new” advertisers has also created more competition in the marketplace.
  • The net results are the most concerning: conversions are down 10% and CPA is up 8% after the initial roll-out.  Google is still the lion’s share of the budget, so advertisers probably are not panicking yet as a 10% decline in conversions on Microsoft can generally be made up elsewhere.  Also, since CPAs are typically lower in Microsoft, an 8% increase probably doesn’t bleed into negative ROI… meaning the CPAs in Microsoft were probably already lower than their overall target.

Impact for Search Marketers

Based on these findings, here are some recommendations to improve results across your BingHoo campaigns:

  • Start focusing on Microsoft.  The new integration now makes up 20-25% of market share, so you can’t overlook it.
  • Ensure account structures are set up well for optimal quality scores and creative optimization.
  • Make sure all your keywords from Google are in your adCenter account and you are trying to maximize traffic for the keywords that drive 80% of your success on Google.
  • Begin aggressive creative testing on your keywords to try and improve quality index scores, CTRs and reduce CPCs.

Note:  Microsoft does not disclose a quality score so it will be hard to gauge success based on this factor.  But CTR increases, or CPC declines and/or increases in average positions or traffic can be a good indicator of success.

  • Test higher bids for greater volumes of traffic and sales.
    • CPCs will increase significantly, but the hope is that improvements in conversion rate will offset these higher prices.

What impact have you seen on your Microsoft/Yahoo! campaigns since the transition?   Do you expect these trends to continue or will advertisers and Microsoft make any significant adjustments to affect performance?

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3 Responses to “Yahoo’s Transition to Microsoft AdCenter: A Mixed Bag for Advertisers”

  1. david says:

    Good data and thoughtful next steps. hope that the drop in conversions is temporary and can be overcome through more optimization

  2. Alec says:

    Great analysis Frank. Do you think the 18% increase in CPCs is a temporary spike, or should advertisers expect these prices to be the new normal?

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