Yahoo has announced its new pay-per-click product: Yahoo Search Marketing (SM). This product was formerly known as Overture, but you may also recognize it as Goto.com, the name it went under prior to 2001. In our experience, advertising with Google AdWords has resulted in higher conversion rates than with Yahoo Search Marketing (SM). However, both programs have advantages and disadvantages. How does Yahoo SM compare with Google's AdWords? Let's start by looking at how they differ (all amounts are in USD).

Bidding

Yahoo SM

• Yahoo places your bid at 1 penny over your next lowest competitor. Thus, if you bid $3.00 per click, and the next highest bid is $1.95 per click, you will only pay $1.96 per click.
• Yahoo allows you to see who you are bidding against and what they are bidding, so you know exactly where you will rank, and how much you will pay.
• Yahoo's maximum bid is $999.99
• Yahoo's minimum bid is $0.10

Google AdWords

• Google doesn't tell you how much you will pay per click. Thus, if you bid $3.00 per click, you will pay anywhere from $0.05 to $3.00 per click.
• Google does not allow you to know how much your competitors are bidding per click.
• An advantage with Google is that you will rank higher if your click-through rate (CT rate) is better (a CT rate is the ratio of clicks on your ad to the number of times your ad is shown). Thus, you may have a better rank than your competitor, even if he or she bids more than you (because of your CT rate).
• Google's maximum bid is $100.00
• Google's minimum bid is $0.05

Low CT rate dropping

Yahoo SM

• Yahoo will drop your keyphrase if the CT rate is ranked very low for a significant period of time. In actuality, this rarely happens. Your keyphrase has to perform quite dismally for it to get dropped.

Google AdWords

• Google drops keyphrases with POTENTIALLY low CT rates. If Google deems that your keyphrase has done poorly for other customers, then your keyphrase won't even get the chance to make a single (first!) impression. This can be very frustrating when your keyphrases are very relevant, but Google won't even let them see the light of day. The flip side, of course, is that if your keyphrase's CT rate is good, you will get a higher ranking (even if you bid lower than your competition).

Showing ads by country and language

Google AdWords

• Google allows you to choose your country and language by selecting them in a dropdown box. Very simple, very efficient, and very effective.
• The language is based on the language setting of the visitor's computer. For example, if you are targeting Spanish Americans, than you will want to target the Spanish AND English languages because many Spanish Americans use English computers. Just make sure that you choose Spanish-only keyphrases.

Yahoo SM

• Yahoo's system for countries and languages is downright miserable. You have to re-register for every country (and only twenty countries are available).
• Worse, you have to re-submit all your keyphrases and reset all your bids.
• What's more, each country has different criteria for submission. This means you have to rebuild your campaign for the USA, UK, and Australia. Canada is there, but you are not allowed to submit English keyphrases (?!?), only French (FYI: Canada's workforce is 73% English, 22% French). In Switzerland, you can submit in Italian, German and French; there is no language differentiation.
• Notable missing countries: Mexico, China, English Canada (which is grouped with the USA), South Korea, India, Russia...

Reports

Yahoo SM

• Yahoo offers many useful reports. And while you can find just about everything you might need, it's left up to you to figure out which report contains the information you were looking for.

Google AdWords

• Google offers customizable reports. You can ask for anything you want, and you will get it.
• They also offer to email you your customized report on a regular basis.

Keyphrase comparison

I have bid on some keyphrases from February 1st to April 30th, and held them in similar positions during that time. These numbers are for search related impressions only. These campaigns were not involved in content advertising.

"Okeeffe print(s)"
#3 position

Yahoo:
1 click
8 impressions
12.5% CT rate
$0.10 cost per click

Google:
63 clicks
1642 impressions
3.8% CT rate
$0.13 cost per click

"Ansel Adams photo(s)"
#5-6 position

Yahoo:
20 clicks
2401 impressions
0.8% CT rate
$0.05 cost per click

Google:
25 clicks
2529 impressions
1.0% CT rate
$0.06 cost per click

Conversions

Our client February Point counted emails + contact forms as conversions. Here is a comparison from February 1st to April 30th.

"Real estate Bahamas"
#3 position

Yahoo:
1037 clicks
19 879 impressions
5.2% CT rate
$0.34 cost per click
3 conversions
0.30% conversion rate

Google:
1557 clicks
35 348 impressions
4.4% CT rate
$0.45 cost per click
13 conversions
0.84% conversion rate

Clearly then, Google AdWords is a better choice if you are interested in clicks, impressions, and conversions. If you want the lower cost per click for the same position, it would seem that Yahoo is the better choice (though conversions are lower).

Competition

FindWhat is possibly the third biggest pay-per-click (PPC) search engine, although there are a few that might be its equal: Kanoodle, GoClick, 7Search, Search123.

E-spotting is very big in the UK, and competes heavily with Google and Yahoo in the PPC marketplace.

MSN is getting ready to launch its own PPC engine to compete with Google and Yahoo (MSN currently uses Yahoo SM on its site). No date yet, but watch out for it.

Overall

To sum up, you will definitely have more control over your money with Yahoo's system. It is more open and honest, and you will pay less per click than with Google's system. Google does not tell you why you are paying what you are paying, but it does have the added bonus of rewarding you with rank for a better converting ad.

Of course, Google does get more traffic and it converts better than Yahoo, and in the end, isn't that what we're all looking for? Thus, Google should be the winning choice for anyone that is looking to convert clickers into buyers. Because after all, who doesn't want to increase their sales?

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