Live from SES San Jose: Yahoo! Demos “Panama” Ad Platform

Attendees at this year’s Search Engine Strategies conference in San Jose CA got their first look at the new search ad platform that Yahoo! plans to roll out in the U.S. by the fourth quarter of this year. They also learned somewhat more about the quality-ranking mechanism that will follow it, possibly as soon as Q1 2007.

“We’ve spent the last year and a half to two years thinking about what it will take to lead in search marketing during the next five years plus,” said Tim Cadogan, Yahoo! vice president of search. The company came up with a revision of the ad setup application and underlying platform, along with a new system that will take into account ad rankings — that is, their measure of success in getting users to click through to Web pages — when delivering search ads. That differs from the current Yahoo! system, which simply takes account of which search marketers paid the highest bid prices to appear against a keyword.

“We are planning to release the ranking scheme in Q1 of next year,” Cadogan said. “There’s a possibility we might bring that scheme forward to Q4 of this year. That is highly dependent on our further conversations with you [the search marketing audience] and some internal testing to see if it makes sense to do that in the busy shopping season prior to Christmas.”

The new Yahoo! search ad application, codenamed Project Panama and first announced in May, will include a number of innovative features, including the ability to let marketers see which keywords gave “assists” to the last keyword or phrase searched before a transaction. For example, said Yahoo senior director of global product marketing John Kim, a user might search for “Sony Cybershot” and click from an ad on that results page to a retailer’s Web site. But if the user first searched for “digital cameras”, the new Yahoo! will show an advertiser that assisting keyword also.

The new Yahoo! platform also makes it easier to target campaigns for specific geographic targets, using pulldown menus and display maps to show available designated market areas (DMAs) in a state. Advertisers may want to limit their campaigns because they only serve a certain region or may want to optimize a campaign for specific areas. “It’s very intuitive — you get a visual display and a description of the DMA,” Kim said, crediting some of the acquisitions Yahoo! has made in the mapping space, including local search and ad delivery technology from Whereonearth.

Marketers will also be able to get help from the new Yahoo! application in assembling their keyword lists. If they choose, they can have Yahoo! crawl their Web and product pages and make recommendations on search terms they should be bidding against. Yahoo! offers a keyword suggestion tool now, but Kim says the new feature will be an improvement over that current offering.

There will be changes to the pricing interface, too. The old pricing page for Yahoo! Search Marketing keyword bids showed users the other bidders paying for a specific term and their bids, ranked from highest to lowest. The new interface won’t show those competing bids for that term. Instead, marketers will see a graph of the number of clicks they can expect to receive for a specific bid on a term; adjusting a slider bar on the graph will reduce or increase those click volumes. They will also be able to see the share of clicks on that term that they can expect to get at a given bid level.

“You can then make a decision about your bid based on where you think you perform optimally,” Kim said. “Two different views, a lot more data, and we don’t think we’re losing anything in making these revisions.”

Yahoo! search marketers will also get new capabilities for setting budgets either for total accounts or for individual campaigns, setting up alerts to be notified of problems in their campaigns, and performing A/B testing of ads.

In outlining the new Yahoo! ad ranking system, John Slade, Yahoo!’s senior director for global product management, pointed to the growing issue of consumers ignoring unwanted, irrelevant ad messages in all media, from TV to the Internet. That was Yahoo!’s motive in transitioning from a purely bid-based ad delivery to one conditioned by ad quality factors such as consumers’ demonstrated acceptance of a message.

“If we can move to a world where the amount you’re willing to pay is not the only factor that determines the order ads get shown in, that’s a better experience for the consumer,” Slade told the SES audience. “So when they click, it’s likely to be more targeted, which makes a better experience for you as advertisers.”

The new Yahoo! ranking will reward advertisers using better quality ads with enhanced positions based on their bids, he said. “Your ad performance can and should influence how you manage your bids and your campaigns. It will free you from having to participate in bidding wars day in and day out and let you focus on what’s most important: driving the right messages to the right targeted consumers.”

Slade said a cardinal rule of the coming Yahoo! transition would be to allow marketers to keep their current ads and any third-party tools they or their search marketing agencies might choose to employ. “The same ads you served before [the coming rollout] will be served the day after,” he said. “You’ll have the chance then to go into the new application and adjust your campaigns as you want.”