1. Enhanced Geo-targeting: you now have the ability to pick more than one geo-targeting option. You can pick different geo-targets by AdGroup or campaign, as well as mix-and-match options. You can also chose to do premium bidding for one target area. For example, you advertise to the entire state of California, but you know you do really well in the LA area. You can choose to bid higher (by percentage or dollar amount) in the LA area.
2. Day-Parting (Ad Scheduling): something we’ve been requesting here at JumpFly for awhile is the ability for Yahoo to automatically turn on and off your campaigns based on time of day. This works particularly well for those who receive many phone calls and want to make sure that they have someone available to answer those calls, or to make sure you don’t run out of budget when your target audience is online and searching. Yahoo took it a step further and allows you to schedule your ads based on your account’s time zone OR the searcher’s time zone (which works well for scenario two above). Another nice feature is that you can schedule this on the campaign or AdGroup level. Unfortunately, they chose to do it by the hour level only, so no half or quarter hours, but it’s a start!
3. Demographic Targeting: you can now target your desired audience, whether by age or gender, and premium bid to them. Something to know is that it does not allow you to exclude any demographic audience, except for those 17 and under. But if you know your best target is a female you can premium bid to females, or if you know that the age target is 25 to 29, you can premium bid to them. Keep in mind if your best target is a female age 25 to 29, it will combine the premium bids; if you set your premium bid at $.50 for a female, and $.50 for ages 25 to 29, it will actually bid $1.00 more for a female age 25 to 29.
4. Better Reporting: Yahoo also is rolling out better reporting options so you can run reports on demographics, dayparting and geo-targeting.

It will be great to see how these improvements pan out over the next few weeks, but I’m encouraged by the changes Yahoo has made and hope they continue to improve.

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The Rich Ads in Search program is currently only being shared with a small number of brand advertisers at this time and enables them to:

• Post images and video, which can increase the branding impact of search advertising.
• Create deep links to relevant pages, which can help drive conversions directly from the Yahoo! search results page.
• Include boxes within the listing that lets users search for their desired product or a store location directly without additional navigation.
• Show their logo, which enhances user trust.

This service should eventually be available to all advertisers. The Rich Ads appear as “Promotional Results” next to the search listing.

I suspect that we are in the midst of the Great Online Video Revolution. YouTube has already taken the world by storm and has been testing video advertising with YouTube Sponsored Videos. However, Google has not yet made the jump to include video ads within search results. However, I suspect it is just a matter of time. Yahoo is first to market with this concept, but if and when Google chooses to move, they will likely takeover the online video advertising market. It will be fun to watch this evolve over the next several years. If you are looking for custom web video production, Webivore has done a nice job with videos for several of our clients.

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Bartz is also on the board of directors for Cisco Systems Inc. with Jerry Yang and is also a member of the Intel Corp. board with Yahoo President Susan Decker, who also interviewed for the CEO position. In fact, Yahoo announced that Decker will resign after a transitional period. Wow, guess she’s angry.

Chairman Roy Bostock said Bartz “is the exact combination of seasoned technology executive and savvy leader that the board was looking for, and we are thrilled to have attracted such a world-class talent to Yahoo. She is admired in the Valley as well as on Wall Street for her deep management expertise, strong customer orientation, excellent people skills, and firm understanding of the challenges facing our industry.”

Bostock added that the board “thanks Sue (Decker) for her service as President, the important contributions she has made to Yahoo’s development in a variety of roles over the past 8 1/2 years, and her willingness to work with Carol Bartz to ensure a smooth transition. We respect her decision to move on to other challenges and wish her only the best.”

Bartz’s appointment already sparked renewed speculation of negotiations with Microsoft, who continues to proclaim they are very interested in Yahoo’s search division. Microsoft CEO Steve Ballmer, who tried and failed to buy Yahoo last year, publicly said in the past few weeks that a search deal with Yahoo should be made when there is a management transition at both companies. Microsoft late last year hired a former Yahoo search executive to lead its Internet business.

Microsoft is feverishly working to prevent Google from getting 100% of all online search queries. If Google continues to gain market share as they have in the past, it won’t be much longer until they are there! Recent data from HitWise indicates that Google has once again increased their market share in the month of December.

At this point, one must wonder if Microsoft or Yahoo has a shot at competing with Google, together or on their own. Of course, at one point, AOL basically controlled the entire online population, so things certainly do change, and fast.

Investors did not react much to this news yesterday, but many discouraged Yahoo investors have likely already thrown in the towel at this point. Yahoo announces earnings on January 27th, so we’ll see if they have anything to say about Microsoft by then. It will also be interesting to see how PPC advertising is weathering the economic storm.

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I haven’t read them in quite a while, so I took some time to scan through the T&C. Pretty much dry, boring legal-ese except for one paragraph that I found very, very interesting:
“OPTIMIZATION. In the U.S. only, for those advertisers not bound by an Insertion Order, we may help you optimize your account(s). Accordingly, you expressly agree that we may also: (i) create ads, (ii) add and/or remove keywords, and/or (iii) optimize your account(s). We will notify you via email of such changes made to your account(s), and can also include a spreadsheet of such changes upon your written request. If you would like any of such changes reversed, please reply to such email within 14 days of the change(s), and we will make commercially reasonable efforts to reverse the change(s) you specifically identify. Notwithstanding the foregoing, you remain responsible for all changes made to your account(s), including all click charges incurred prior to any reversions being made. It is your responsibility to monitor your account(s) and to ensure that your account settings are consistent with your business objectives.”

Wow. You mean to tell me Yahoo can go ahead and make changes to an account whenever they want and without contacting you to find out what your goals are for your account? I’m sitting here, trying to think of a word that adequately conveys exactly what I think of this policy, and all the words I’m coming up with are not fit for posting. It seems extremely irresponsible to me that Yahoo thinks they can add or delete search terms, and write new ads for someone they’ve never even spoke to. And then have the audacity to notify that company by email and only send them the changes if they are requested AND THEN only give them 14 days to request that it be put back.

And if you do request the change, they will only put forth “commercially reasonable” effort. Commercially reasonable? What does that mean? What if they commercially screwed things up for that client? Whose definition of commercially reasonable applies?

All I can say is thankfully our JumpFly clients have been opted out of such a crazy possibility. I can tell you that if I was on the receiving end of some Yahoo change, I’d be pretty upset if it didn’t work and I couldn’t go back to how my account was.

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According to regulatory filings, Billionaire investor Carl Icahn increased his position in Yahoo by 6.78 million shares between November 24-26 (at about $10 per share), raising his total to 75.58 million shares (about 5.5% of the company). I saw a recent presentation he made where he stated that he continues to believe Yahoo shares are undervalued, but admits that he also thought they were undervalued when he was last purchasing shares near $25 per share. So far, he is down about $1 billion on his investment. Ouch! He is still looking for some type of partnership with Microsoft on their search efforts which he believes could help save Yahoo a great deal of money. While there are no alleged talks going on at this time, I suspect these two will eventually work out some type of agreement. With Yang stepping down and both Icahn and Microsoft’s Steve Ballmer expressing interest in a search deal getting done, I think something will eventually develop. I would also like to mention that I very much hope that Carl Icahn is a better investor than speaker because quite honestly, listening to him speak was a little painful. Sorry Carl, but it’s the truth.

Black Friday & Cyber Monday Both Posted Impressive Increases Year Over Year

Sales during Black Friday, the day after Thanksgiving, saw an increase of 3% over the prior year. Last year’s sales of $10.3 billion on Black Friday increased to $10.6 billion spent this year. Though this gain appears promising for the economy, many fear that the increase in sales was at the expense of profitability. And though spending was up on this day, it may still be down for the Holiday season. One Gallup Inc. poll suggests that spending on gifts will be down 29% from a year earlier. We’ll soon know for sure.  

Online shopping saw a more dramatic increase in sales. According to data released by ComScore Inc., online sales for Cyber Monday, the Internet’s equivalent to Black Friday, jumped 15% from a year ago as Internet sites lured millions of consumers with offers of free shipping and dramatically reduced prices. Online sales increased from $733 million on Cyber Monday in 2007 to $846 million this year. Forrester Research expects 12% year-over-year growth for online holiday sales, or $44 billion in this November and December.

The US Economy Searches For Stability 

The US Economy continues to look a bit frightening and unstable. However, some good things are also taking shape. Gasoline prices are the lowest they have been in years, with prices at about $1.70 per gallon here in Illinois. That’s a far cry from the $4+ getting charged just 6 months ago. Additionally, mortgage rates are dropping and refinancing is rapidly picking up, enabling homeowners to lock in lower rates and lower monthly payments. Though we are clearly not out of the woods yet, there does seem to be shared hope that the economy will stabilize and business will pick up by the end of 2009. I suspect it’s going to be an interesting year.

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Yahoo search volume is dropping consistently, down from nearly 22% in October 2007 to below 18% for October 2008. MSN took a drop from last year as well in their search volume, but it seems to be holding in the mid 5% range from month to month now. So that does beg the question, is it even worth running PPC campaigns on Yahoo and MSN? Clearly, there is some volume to be had on both of those search networks, so they definitely have some value to some advertisers. If your budget is tight, though, and you are testing the PPC waters, I would suggest starting on Google only and then see where you can go from there.

Another strategy to consider for Yahoo and MSN, which we have implemented and seen success with, is to start out strong on Google for a month or two and then only move your best performers over to Yahoo and MSN. Since Google does bring in the most volume by a large margin, their search platform can really give you a good indicator as to whether a certain product, or a certain groups of keywords, or specific ad copy, will bring you the ROI you are looking for. It isn’t always an apples to apples comparison, and what works on Google does not necessarily always work on Yahoo or MSN, but you can certainly get some strong indicators as to what might work on the other engines by analyzing what is working on Google first.

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Failed Microsoft Buyout

Things became particularly interesting for Yang about six months back, when Microsoft attempted an unsolicited buyout for roughly $33 per share, which was a generous premium to Yahoo’s $19 stock price at that time.  Unfortunately for Yahoo shareholders, at least in the short term, Yang vocally resisted this opportunity and took measures to ensure that it would not come to be. Today, Yahoo’s stock price sits under $9 per share just six months later, the lowest level since 2003.

Microsoft might come back to the table, but just yesterday Steve Ballmer said, “We’ve moved on,” during a shareholder meeting in Bellevue, Washington. He reiterated that a partnership between Microsoft and Yahoo in the Internet-search market is “an interesting possibility.” However, Ballmer added that there are no talks about such a partnership at this time.

Google Backs Out of Partnership

Some are speculating that the final blow to Yang recently came from Google, who backed out of a proposed ad partnership to avoid a potential anti-trust battle with the Justice Department.

YouTube Surpasses Yahoo

Earlier this week, Comscore data revealed that YouTube surpassed Yahoo as the second most popular search service, receiving 2.6 billion search queries in August, 2008 compared to Yahoo’s 2.4 billion queries. The rapidly growing online video marketplace represents yet another area that Google dominates.

In a memo emailed to Yahoo employees Monday announcing his resignation, Yang wrote, “All of you know that I have always, and will always bleed purple. I will always do what I think is right for this great company. While this step will be an adjustment for all of us, I know it’s the right one.”

Yahoo needs to do something in order to prevent their one time search engine dominance from deteriorating into obscurity. Yahoo still boasts 500 million users worldwide, but increasingly every month, more and more are turning to Google for their search needs.

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The blog states, “… after four months of review, including discussions of various possible changes to the agreement, it’s clear that government regulators and some advertisers continue to have concerns about the agreement. Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners. That wouldn’t have been in the long-term interests of Google or our users, so we have decided to end the agreement.”

In response, Yahoo! said it was disappointed by Google’s decision and maintained that the abandoned partnership would have been beneficial for everyone. Yahoo! just lost out on hundreds of millions of dollars in additional annual revenue that would have resulted from the deal. Yahoo!’s statement also said that they are, “disappointed that Google has elected to withdraw from the agreement rather than defend it in court.”

Several analysts speculate that losing the Google deal will make Yahoo! more likely to revisit a possible deal with, or outright buyout from Microsoft. Details of the Google-Yahoo! partnership put up significant barriers to a Microsoft buyout – barriers that no longer remain. Yahoo!’s stock price finished up today despite the DOW plunging 486 points, likely due to investor speculation and hopes for renewed buyout potential. We’ll see how this plays out, but I’m confident that Microsoft execs are talking about this situation as I type. Tic toc. Tic toc. Time will tell if Microsoft will come back to the table. In the meantime, Google continues to expand their search dominance.

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Yahoo Minimum Bids Increasing

Yahoo has been periodically raising minimum pay-per-click (PPC) bids on various keywords, and to me, there is no rhyme or reason. Some minimums are only being raised a small amount, like ten cents. But some of the increases are ridiculous including increases of thirty, fifty, even seventy-five cents. Supposedly the minimums are determined by competition – the more competitors, the higher your minimum bid must be (which sounds like a nice way for Yahoo to make more money). It’s also supposed to be determined by how relevant searchers find your ads. The better your CTR versus your competitors, the lower your minimum bid should be.

This doesn’t happen very often, where we have two clients with the same search terms, but I have one situation where this has happened. I have two clients with the same term, and in the last round of changes back in September, both of them were required to increase their minimum bids. Both had a CTR of well over 3%. When I emailed my Yahoo rep to find out about why, I was told that it was probably because of too much competition. Now when I checked, there was a total of four advertisers on the term. And the minimum bid wasn’t a minor increase, but a really major increase. For one of my clients it went from $.29 to $1.12. The other one was required to go from $.29 to $.86. And now, there’s one lonely (and probably happy) advertiser on this term.

Here’s another instance that really burns me up. I have a client who is advertising on their own URL, which is something we recommend doing. Yahoo wants them to increase their minimum bid from .93 to 1.56. On their own URL.

Another annoyance – we get Minimum Bid Increase notices on keywords in old campaigns that haven’t run for a long time and are paused. It would be nice if Yahoo would take into consideration that paused campaigns don’t need to have notices sent. The only thing to do to stop the notices is to delete the keywords or campaigns, because Yahoo doesn’t care if the search terms themselves are paused.

I don’t know if Yahoo has noticed an actual decrease in revenue, but a lot of the bid increases that Yahoo is making are souring my clients on Yahoo even more than they have been in the past. Most of them are spending LESS on Yahoo than before, because some of the bid minimums are so ludicrious that it doesn’t make advertising on them worth it. They should take a look at what Google is doing – they’re doing AWAY with inactive bids, and Google keeps gaining share, not losing it.

Something else to keep in mind: just because you’ve gone through a round of bid minimum changes in the past doesn’t mean you won’t get them this time. Make sure to keep an eye out for the email, and continue to check your Yahoo account for them, because there’s no rhyme or reason on when and what keywords might get flagged. And once they’re flagged, you need to determine the ROI on the increase so you can decide if you’re willing to pay the price or respectfully decline by deleting the keyword.

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Yesterday, Yahoo, Inc (NASDAQ: YHOO) reported that revenues were $1.7 billion for the third quarter of 2008, a 1% increase compared to the same period of 2007 (view press release). As the stock price hovers near $12 today, investors can only fantasize about revisiting the recently missed opportunity Yahoo rejected to sell to Microsoft for $47.5 billion, or just about $33 per share. One might think that Microsoft could yet be interested. If they liked Yahoo at $47.5 billion, then the current market capitalization of $17.5 billion must look like a steal! There are plenty of articles out there examining the overall earnings numbers, but I want to focus specifically on what these numbers mean to the pay-per-click (PPC) advertising industry.

Deeper Investigation Reveals Strength in PPC Search Engine Advertising

Search generated revenues from Yahoo’s owned and operated websites (O & O) were $438 million for the third quarter of 2008, a 16% increase compared to $375 million for the same period of 2007 (view report provided by Yahoo). This number is significant because it verifies ongoing strength in the PPC advertising industry. Yahoo was able to pull off this revenue increase despite a decreased year-over-year search query volume. This seems to indicate an increase in what PPC advertisers are spending per click, an increase in the number of advertisers, or both. Though Yahoo showed little or even negative growth in many areas, the demand for PPC advertising at strong brand names like Yahoo and Google clearly remains quite strong and increasing.

Just last week, Google announced a 26% year-over-year increase in earnings. In regards to their paid click revenue, Google said that the number of paid clicks rose 18% compared with the same period a year earlier.

Other Interesting Yahoo Earnings Notes

Yahoo announced a cost-reduction strategy that includes eliminating at least 10% of its roughly 15,000-member workforce. Refer to the Alley Insider for a copy of the actual memo sent to Yahoo staff members. 

Display advertising revenues increased 3% compared to same time period a year earlier but decreased compared to the prior quarter.

Revenue generated from Yahoo’s distribution network decreased from the previous quarter and compared to the same quarter at this time last year.

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