Why Yahoo!, MSN & Ask.com Will Fail In The Pay-Per-Click Game

By Yaro Starak
21 Comments

Yahoo! Search Marketing’s Failure

I’ve cancelled my Yahoo! Search Marketing (YSM) pay-per-click (PPC) account. It’s a terrible product and I’m not afraid to tell you why.

One problem, the first big problem most people notice especially if they have been using Google’s AdWords system, is how terrible YSM’s system is to use. The interface is awful and after using Google’s system it’s almost physically painful to navigate around YSM. You would think after all this time and so much negative feedback that they would work to update and clean their many-years-old system. It’s not like they can’t get access to Google’s system and see what Google does so much better.

YSM has a monthly minimum spend of $25. That means if you can’t generate enough clicks you will get charged a minimum fee of $25. To combat this you have to struggle with the system to enter in new campaigns in hope of attracting enough clicks to get your moneys worth. Then the quality of the clicks starts to drop because you chase less relevant keywords and your conversion rate suffers.

Of course why this is a real problem is because Yahoo’s network just doesn’t get the traffic that Google does. You can’t get the clicks because Yahoo’s network can’t deliver the impressions.

That’s a fantastic combination for customer dissatisfaction.

To top it all off YSM forces you to pay a $100 joining fee which I have just found out is not refundable. They probably do this so they at least make *some* money from you before leaving dissatisfied.

Okay, I’m being a bit harsh, but I’m frustrated and I’d like Yahoo! to do something about it. The blogosphere is powerful and I suspect there is a good chance my comments may get back to someone who matters at Yahoo!.

Why Google Owns The Pay-Per-Click Industry

Pay Per Click CompaniesI suspect Yahoo! is well aware of the shortcomings of their PPC system, I’m definitely not the first to complain about it. The underlying problem is that Google owns the lion share of the search traffic and is leaping far ahead of every competitor with their ever expanding publisher’s network (Google AdSense). Consequently Google can deliver more impressions and clicks and combined with a far superior system, which is regularly updated and simple enough to be used by small business owners, and you have a recipe for market domination.

Of course Google depends on their PPC system for 90% of their billions of dollars of revenue so as you can imagine, their interest is certainly in retaining a leadership position in the PPC marketplace while MSN and Yahoo! don’t depend on PPC to keep their businesses going (thank goodness for them!).

As you may have heard, MSN and Ask.com have also recently launched pay-per-click systems. Ask.com survived previous years because it made use of Google’s system to generate revenue while it was getting back on it’s feet. Now that it has some momentum it’s decided to try an internal PPC system. Of course MSN could never consider making use of Google’s system so they have been busy playing catch up to launch their own PPC technology, but like Yahoo!, I suspect their system will suffer from low traffic levels since their network just doesn’t have the reach that Google’s does.

And that’s the problem.

Google wins because of the long tail. Google makes such a tremendous amount of money because millions of businesses all around the world operating in millions of markets all use AdWords to promote their wares. The other search engines just can’t service as big a long tail as Google can and can’t offer the results where it matters – targeted traffic – like Google can. Their reach is shorter so their tail is shorter too.

Consider The Typical Small Business Owner

I’m a pretty good example of a reasonably average Google AdWords user. I don’t spend much but I keep at it month after month in my little niches. I use AdWords and get customers. Google understands the end user is millions of average joes like me and works to meet my needs.

PPC needs to satisfy the long tail of users, the average small business joes, who only have so many hours per day to devote to PPC campaigns. Since I follow an 80/20 rule I’ll spend my time where I can get the best results with the least effort. That is Google AdWords.

I don’t want to have multiple options for PPC. I want one system with maximum reach. I want to manage one set of campaigns in one well constructed interface with my ads going across every network to as many targeted searches and content as can be delivered (or that I can pay for).

The Big Boys Playing Together?

Ever since Ask.com (back then, Ask Jeeves) worked with Google in an effective relationship I’ve thought about all the search engines working together. Google will likely remain dominant in the PPC marketplace as long as the market is viable since it depends on it so much. Google has the best technology and provides the best service. Instead of cluttering the market with inferior competitors, who create more systems for small business owners to struggle with in order to market their businesses, why can’t everyone use Google’s system and share the revenue?

Why can’t we just tick a box in AdWords if we want our campaigns to run across Yahoo!, MSN and Ask.com? The customer gets the best experience and therefore more customers come on board and the size of the market increases. With a larger market the revenues increase for all participants. A utopian solution where everyone benefits or am I dreaming or misinformed?

I couldn’t begin to speculate whether working together would be more lucrative for the search engines instead of each having their own PPC system. Certainly based on Ask.com’s decision to create their own PPC system you would think it is more profitable than working with Google since they must have done the numbers.

In this case, unfortunately, I think this is a situation where the customer loses because the big boys have to compete. In most circumstances competition benefits the consumer but I think in the PPC war, as the current market sits, it would be better if there was only one system to service the entire industry so the little guys like me can keep it simple.

Yaro Starak
Average Joe

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21 Comments

  • Great article Yaro for Adwords geeks like me :)

    You have absolutely hit the nail on the head. Yahoo’s system sucks because it is

    A) clunky and slow to use
    B) gets very little traffic
    C) expensive to use and test
    D) has a ponderous approval process
    E) has an algorithm that is based on max CPC only, not a combination of factors that reward smart people.

    You have pretty much said all that stuff above, but for some visceral reason I just had to type the words myself too :)

  • That’s a very good post Yaro. I can understand the short-term frustrations with the poor options available from so called ‘competitors’, but I have to disagree with any kind merging of the giants.

    As you point out, these others must be only too aware of their failure and frustration, and although we can’t see it, you can bet your life that someone somewhere is working frantically at improving and therefore competing with the world leader.

    Try to imaging if there was just one choice. They could do what they want when they wanted and not have to listen to anyone. Disgruntled users would be complaining on death ears but would find themselves using the services because that’s all they have available to them.

    Most things work out given time and you can guarantee that at some point in the future Google will be given a very big wakeup call as something from nowhere jumps in on the virtual bandwagon for the benefit of us all.

    If ever there’s an industry that can launch a new product or service from the virtually unknown to global competitor, then it’s that of Electronic commerce (or e-commerce) and that can only help the end user.

    Aitch

  • Will – I missed a few of the Yahoo! failings you mentioned so thanks for contributing – I’m sure someone at Yahoo! will take notice.

    Aitch – You know your argument about having a single provider makes sense, as it should for any monopoly market – but for some reason I just don’t feel like that would be the case with Google. I think it’s because AdWords will only be used if it delivers results. So I guess even if Google had complete monopoly of the PPC delivery system they wouldn’t have a marketplace monopoly because they would be competing with all the other ways business owners can spend money to bring in clients.

  • Yaro, I couldn’t agree more. My sites do have some benefit from YSM, however its hardly worth the great amount of time it takes to tweak, make changes, add campaigns.

    Is it arrogance, stupidity or laziness on the part of Yahoo to continue pushing a vastly inferior product? With their money, you’d think it would be imperative to create a superior product to even have a chance at competing.

  • What about other PPC like enhance, miva, etc.? Is the sentiment the same?

  • Maybe Yahoo doesn’t care because like google it doesn’t bring in 90% of its revenue via search. I just pulled that out of my a$$…but I think it may have some merit.

  • Craig – while I’ve never used the other PPC services you mention I presume they don’t have access to a very large market to distribute ads to, only Google can claim that, so I’d not have much hope for them.

    I’m sure all these competitors can survive, but Google’s domination will be significant as long as they own the search market and have the huge publisher’s network.

  • Nice blog Yaro:)

  • Hmm, I have never tried to use Yahoo! PPC system, but from I keep reading, its not doing that well.

    Nonetheless, they have spent so much money trying to revamp their system to match googles and take a bigger share of the Online Revenue market.

    Only a couple of months ago Yahoo! and Seven Australia signed a deal for http://au.yahoo.com/ or. Yahoo!7. Yahoo is still the second largest search engine and from my own experience of getting some 2100 unique hits a day to myweblog.com, around 26% of that does actually come from Yahoo!

  • Ed

    In general this article is good and I agree with a lot of your points, but I think what you actually mean is that Yahoo, et al will fail in the ppc game in comparison with Adwords. To say that YSM will fail in general is a ridiculous overstatement.

    OK – YSM suffers hugely when comparing it with Adwords for all the reasons mentioned, but at the end of the day the only thing that counts in ppc is the metrics (oooh – did that sound really hard nosed?) and I’d be pretty surprised if YSM didn’t have large numbers of satisfied customers based on number of conversions, conversion rates, cost per conversion and, errr, ROI.

    Also, as Alborz mentioned Yahoo has a significant share of the search market – to just ignore that because of a clunky user interface seems a little short sighted.(/devils advocate>

  • Ed

    Anyway the worst thing about it is there is no split testing for ads!

  • JP

    Christ… I was thinking of signing up for the Yahoo program just to get those multiple streams coming in. I didn’t know any of that, epecially about the fees and what not. Junky…

    Cheers,

    JP

  • hi,
    my first time here. Correct me if I am wrong, Yahoo only approves sites from the US to be their ad publishers.Is it true?

  • Costa – You are confusing the Yahoo Publishing Network (YPN) with Yahoo Search Marketing (YSM). YPN is like adsense, for publishers to make money by placing ads on their sites. This article discusses YSM which is like adwords, where you advertise to bring traffic in to a website.

  • [...] Polecam bardzo ciekawy artykuÅ‚ dla tych, którzy zastanawiajÄ… siÄ™ nad różnicami pomiÄ™dzy Google’s AdWords i Yahoo! Search Marketing. [...]

  • Ed- Thanks for commenting, been a while since we heard from you! You’re also more familiar with YSM than I am so I appreciate your feedback.

    Yes, quite right that YSM will fail compared to AdWords, which is especially sad given overture basically invented the PPC concept.

    My main point that I want to make is that ideally (unrealistic though given the competitive marketplace) I’d like the AdWords system to be applied to the entire PPC marketplace – this would include Yahoo! search market as well, but with only one single entry point and one system to control all the campaigns. Google having the best system and most interest in keeping it going, would be the best candidate to control the system at the moment.

    Plus all the ramblings on the long tail and small business owners etc backs up this point.

    I think it’s safe to say that right now, yes, YSM has already failed, in comparison to AdWords. It’s also failed me as a customer, at least for now.

  • scr

    I don’t entirely agree that Google will win simply because of having pioneered the PPC field. I think Google is getting complacent. Many of the features advertisers have been requesting for over a year, have now appeared in the new MSN interface. Despite being a vocal MS critic, I have to admit their system is well designed. Google doesn’t provide daypart control for ad display, and can’t tell you by what time each day your budget has been consumed.

    Moreover, studies indicate that more women use Yahoo, while men prefer Google, on average. If the product you’re pushing has a female target market, it makes sense to use YSM.

    YSM’s interface is clunky…until you’ve used Ask.com, which is such complete crap that I’d never recommend it to anyone. No tech support, very limited budget control, no phone number, terrible reporting, no submission process feedback.

  • We tried Yahoo/Overture again after abandoning it for a year, and yet again, gave up. New features are fequently added to Adwords but YSM is exactly the same clumspy old beast it was one or two years ago.

    Further, YSM editors (human) sometimes think they know better and frequently reject ads where there are strings of numbers on it (TOS disallowd telephone number, but they think any string of numbers is a telephone number).

    And yes, that £25 minimum usage per month annoys me. So I walked.

  • Tim

    I’ll say one thing about Yahoo PPC.

    They utterly SUCK.

    This $25 Minimum Spend rubbish is a disgrace.

    Here I am, an advertiser, who’s stopped PPC on Yahoo temporary for whatever-reason, and I get a nice email that I’m going to be charged $25 even though I’ve spent $0 in the month. Disgusting.

    It’s no secret, Yahoo wants your money. In fact it does anything it can to GET YOUR MONEY. If you don’t even use there system in fact.

    It’s old “bidding war” system is utter proof of what Yahoo will do to get your money. Just look at the pathetic emails it sends you, “make more money buy spending more on PPC at Yahoo!”. Read them, that’s the basic gist. I find it disgusting.

    It’s easy to not “deactivate” your account at Yahoo and get slapped with this small, but irritating fee a month later.

    P.S I don’t love Google either, in fact Google has taken more money from me than Yahoo, I just hate it less than Yahoo because Google tries not to get into such blatant profiteering practices like Yahoo (e.g. bidding war previously, all kinds of crap to keep you paying, crap newsletters about using PPC, and they know it).

    Google is rich beecause of the geniuses at Google. Nothing more, nothing less. Make no mistake, Google is out for your money too. It just does it in a much more shifty/intelligent way than the pick-pocketing Yahoo.

    P.S I have not lost a house on PPC, I’ve broken even basically. I see the big boys for what they are.

    Ah.. here, some more quality content, these should be the new trademarks for google and yahoo:

    Google: Do no (Noticable) Evil.
    Yahoo: Do you (give money to) Yahoo!?

  • Well, for one, YSM is only open for US publishers. Google Adsense is worldwide.

  • YSM can make more money for me while them allows promote Amazon direct link, but now I have stop campaign already.

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