Tuesday, October 16, 2007

Yahoo! Making Strides in Search Marketing? A Result of Panama?

One of the knocks on Yahoo! has long been that although it has a fairly large second place stake in the search market, it has never been able to monetize search effectively. A new study from SearchIgnite and RBC Capital Markets indicates that Yahoo! is making progress on rectifying that, however.

According to the study, even though Google's share of impressions rose dramatically between August and September, and Yahoo!'s fell at about the same clip, Yahoo! beat Google on eCPM for the first time since February. Google's eCPM was down due to falling click-through rates, while Yahoo!'s was up due to higher CPC figures -- Yahoo!'s CTR has stayed more or less the same since May. Is this the much vaunted Panama advertising platform finally paying off?

Yahoo! saw the percentage of the total ad spend on its search properties raise in July and August and fall in September, Google saw an opposite trend -- ad spending fell over the summer and jumped in September. The spending trends appeared to coincide with the back-to-school bump in search volume and paid search impressions that Google felt, which resulted in a near equal but opposite dip in search market share for Yahoo!. In the third quarter as a whole, however, overall spending increased 7.8% over the previous quarter for Yahoo!, while Google saw an increase of just 0.8% for the same period.

In July we took a look at Yahoo!'s Panama initiative 6 months in, and found no real concrete evidence to make a determination about whether it was or wasn't working. One study we looked at in that post noted that campaign conversion was actually down since the launch of Panama. Regardless, advertisers spent more per click for the same CTR this summer on Yahoo! search ads. Could that suggest improved conversion rates from Yahoo! ads?

Modest gains aside, Yahoo! still has a long way to go to catch Google. The latest comScore numbers have Yahoo! still well behind Google in terms of market share, and as the chart above shows, in spite of spending gains, Yahoo! still has a long uphill battle to catch Google. But that Yahoo! is beginning to see more dollars being spent on their search ads is a good sign for the company. My rudimentary knowledge of search marketing suggests to me that gains in eCPM based on higher CTRs would be better than gains based on higher CPCs, but that advertisers are will to spend more per click is good news for Yahoo!.

Via GigaOm.

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