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June 04, 2007

Smart pricing comes to the Yahoo Publisher Network

Those publishers who fled Google AdSense for the Yahoo Publisher Network because of revenues being affected by the impact of smart pricing on EPC will now have to content with YPN's own version of smart pricing, called Quality-Based Pricing.

Essentially, this means if your traffic that clicks on your YPN ads doesn't convert for advertisers, your revenues will be negatively impacted. If you tend to have quality traffic, you shouldn't see a problem, but those with sites with traffic that tends to convert poorly for advertisers could be affected in the same way that Google AdSense smart pricing affected revenues.

But quality of traffic is not the only thing that Yahoo is taking into account when it comes to quality-based pricing. Original traffic source as well as implementation type are considered as well. So Yahoo could discount publishers for specific traffic sources, whether it be from spammy third tier engines or theoretically even taking a competitive stance against Google or MSN traffic while boosting Yahoo referred traffic.

If a publisher is earning less for a click than the same ad on another site would earn, that doesn't mean that Yahoo is pocketing the difference. The savings are passed on accordingly to the advertiser, just as is done with Google's smart pricing.

Of course, this does bring up the whole issue surrounding relevancy. If I have a site about hockey yet am seeing ads for mortgages and long distance, those ads are definitely not targeted to those visitors. And as a result, the odds of a successful conversion - and value - for those advertisers is seriously impacted. So publishers who are showing irrelevant ads for their content could find themselves losing revenue through no fault of their own, but simply because Yahoo is not providing ads that are targeted to the content.

It is a gutsy move to make at this time because of the current relevancy issue, although I am not surprised they have decided to follow the path Google set with smart pricing. And the end of the day, Yahoo wants to encourage advertisers to advertise on the content network, and this is one way to give advertisers the warm fuzzies when they know that if a specific site has lower quality traffic that they simply won't have to pay as much for that click.

Yahoo is going to roll out the new quality-based pricing slowly, where it will first be released for specific market & keyword areas, although the specifics of which ones has not yet been released yet. But they expect to expand it in the coming months.

What do you think about this new quality-based pricing?

For more information, see the YPN Blog (for the publisher perspective) and the YSM Blog (for the advertiser perspective). They also have a new FAQ for advertisers.

Posted by Jenstar at June 4, 2007 05:59 PM

Comments

Yeah Jen, I can't say I am suprised either. I figured it would happen sooner or later. It is a big plus for future advertisers, but it is a big downfall to the publishers who went to Yahoo due to the PPC difference from Adsense.

Posted by: Patrick at June 4, 2007 06:51 PM

Extremely bad move. Like you said it's gutsy enough to do this at a time when it will be seen as a slap in the face to publishers who already know Yahoo! can't spell relevancy. But they're also doing it just before Ask.com launches its promising looking contextual network that, if it delivers on all it promises, could blow Yahoo and even Google out of the water. At least until they can regroup and copy all of the innovations that is.

Posted by: GeorgeB at June 4, 2007 07:01 PM

Not a good thing I think.
The man who buy the ads will pay the same, only yahoo will win more :/

Posted by: billyboylindien at June 5, 2007 01:05 AM

if they could only work on that relavency issue then both partieswould be happy.

Posted by: R.J. at June 7, 2007 09:09 PM

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