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Amending the Alliance: A Sneak Peek into Yahoo Gemini’s Ad Enhancements

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In a move that provides Yahoo with greater flexibility to monetize its search traffic, Microsoft and Yahoo announced in a recent press release that the online media giants have amended their search partnership to “improve the search experience, create value for advertisers and establish ongoing stability for partners.”

The basic framework of the original agreement remains intact; however, both companies can now exercise greater autonomy under the new deal, specifically as it relates to the delivery of text ads across devices. Shortly after the details of the new agreement were announced, a number of 360i client partners were invited to participate in a test that has offered a sneak peek into Yahoo’s future ad enhancements, including the ability to serve text ads across desktop through Gemini, Yahoo’s self-serve ad platform.

Below we have highlighted five key observations from the recent Gemini test for search marketers to consider as they begin to evaluate how the new agreement will impact their campaigns.

Yahoo Wastes No Time Exercising Autonomy
Under the terms of the new agreement, Yahoo is now able to move beyond Gemini’s mobile-centric offering and exercise greater authority over its desktop traffic – a game changer for paid search advertisers. In the days following the announcement, Yahoo unveiled enhancements allowing Gemini to serve up to 49 percent of text ads on desktop across the Yahoo network. Based on current search market statistics, 49 percent of Yahoo’s desktop search traffic equates to approximately 6.2 percent of total search query volume. While relatively small in the grand scheme of things, 6.2 percent of the market is significant enough to warrant a search marketer’s attention.

To capitalize on the elevated retail search volume in the days leading up to the Mother’s Day holiday, Yahoo informed select retail partners that a test would be conducted across 1,600 Exact Match keywords on Yahoo owned and operated properties. Throughout the experiment, up to 100 percent of the search traffic on Yahoo would be served through the Gemini platform. According to Yahoo representatives, the purpose of the test was threefold: (1) Gather insight into the platform’s functionality; (2) Measure its ability to deliver text ads in a high-traffic environment; (3) Troubleshoot the new technology.

The test provided 360i client partners a unique glimpse into what the multi-platform landscape will look like in the near future. Understanding how audiences behave is critical to building an effective search marketing strategy, and for the first time since the search alliance went into effect, search marketers now have the ability to evaluate each engine’s performance independently, as well as exhibit greater control over where search dollars are invested.

Early Performance Insights for Gemini’s Desktop Ad Delivery Functionality
Following the test’s launch in early May, 360i began observing the distribution of key metrics across the three platforms. The initial findings, while limited, are both insightful and promising:

Yahoo chart cropped*Estimated CPC to achieve ad position #3 in search results
NOTE: Results are based on top Exact Match keywords (by spend) and are not representative of the search market as a whole.

Preliminary results indicate 72 percent of the total impressions originated from Google (differing slightly from comScore’s latest Search Engine Rankings report), while only 11 percent came from Yahoo. Nonetheless, Gemini achieved the strongest click-through-rate (CTR) by a considerable margin, capturing 16 percent of the total clicks. It is possible that the CTR favorability witnessed during the testing period can be attributed to Yahoo’s search engine results page (SERP) layout favoring paid text ads. Text ads dominated viewable landing page results on Yahoo.com, with as many as five “top of page” listings being positioned above the organic results.

With fewer distractions on the SERP, searchers are more inclined to click on paid listings. Most interesting, however, is the disparity in cost-per-click (CPC) needed to achieve an average Rank of third position in search results. CPCs are often indicative of competition, so it comes as no surprise that Google CPCs were the highest. Interestingly, Gemini’s CPCs were 27 percent lower than Google and 19 percent lower than Bing. Yahoo’s CPC efficiencies are promising, but the question arises: Will they last? It’s probable that once more advertisers enter the marketplace, not only will Yahoo’s share of clicks reduce, but its CPCs will rise. Nevertheless, if Yahoo is able to replicate the initial results once the full transition is complete, not only will it drive favorable pricing in the short-term, but it is likely to see more search marketers shifting more marketing dollars to Gemini.

Traffic Segmentation Methodology
Since the new terms were announced, there has been a great deal of speculation around how the search traffic will be segmented between the two engines. And from this experiment, many marketers are questioning whether the ‘keyword governance’ methodology used in the current Gemini test could be an indication of how Microsoft and Yahoo plan to manage keyword traffic to achieve the 51 to 49 percent balance outlined in the new agreement.

Understanding how traffic will be split between the two engines is critical for search marketers and will likely impact the way media is bought in the future. Neither Yahoo nor Microsoft have disclosed details for how the split will be achieved just yet, but there are two popular working theories at this time:

  1. Yahoo and Microsoft will use the keyword governance (i.e. keyword ownership) approach used in the current Gemini test. In this scenario, Yahoo would theoretically “own” keywords A, B, C while Bing Ads would “own” keywords X, Y, Z. Based on anticipated traffic volumes for each keyword set, the Bing list would equate to 51 percent of traffic while Yahoo’s list would capture 49 percent. With millions of unique search queries entered each day, executing (and maintaining) this approach effectively would be a considerable challenge.
  2. There will be an integrated system that funnels search traffic between the Bing Ads and Gemini platforms in real-time. This solution seems reasonable, but it would require considerable development and data sharing between Microsoft and Yahoo for the foreseeable future. As each company works towards greater autonomy, the notion of shared technology seems unlikely.

Regardless of how the two tech giants elect to split traffic, it will have significant implications for marketers. As search evolves and campaign management becomes fragmented, it is important for advertisers to consider how this new landscape will impact their marketing strategies and how they reach their target audiences.

Yahoo Introduces New Quality Score Metric
Demonstrating Yahoo’s commitment to blazing its own path, the Gemini platform will leverage a new iteration of Quality Score called ‘Clickability.’ Clickability replaces the Quality Index score used by Bing Ads, but is intended to function in the same manner as its Microsoft predecessor. CTR has always been a primary component in Quality Score analysis, but a name like ‘Clickability’ suggests Yahoo may be placing a greater emphasis on CTR than other Quality Score algorithms. How significantly Yahoo’s Clickability scores will differ from Bing Ads’ Quality Index scores is yet to be determined, but Gemini users are encouraged to monitor Clickability scores closely as any discernable nuances will impact ad positions and CPC.

Gemini Lacks Feature Parity with Bing Ads
Another important consideration for marketers is that Gemini’s desktop ad delivery functionality is still in its infancy and lacks product and feature parity with Bing Ads and Google AdWords. As it stands today, Gemini’s management functionality allows advertisers to manage keywords, bids, budget, structure, and ad copy but does not offer the more sophisticated ad extensions and other features search marketers commonly leverage. Yahoo’s engineers are actively working towards greater parity, but marketers should be mindful of the features currently missing from Gemini, and consider the potential impact on campaign performance.

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One thing is certain: Yahoo is committed to building a world-class platform and will be moving quickly on updates in the near future. As both Yahoo and Microsoft continue to iron out the details of the revised search alliance, advertisers should anticipate changes taking place immediately, and likely continuing through the first quarter of 2016.  Search marketers should keep a close eye on how the changes may be impacting their efforts to best evolve their strategies on the platforms.

Cover photo via Search Engine Land.