Why Search Networks Matter to Google, Yahoo! and You-hoo	Visited: 1555 5.0/5.0 (9 votes total) Rate: Select 1 - Terrible 2 - Poor 3 - Average 4 - Good 5 - Outstanding
by Michael McVeigh June 02, 2008

As Yahoo! races to develop new search revenue strategies to fend off Redmond and now Icahn, it is creating as much irony as news. Take Yahoo!’s much publicized test serving of Google syndicated search ads on Yahoo.com. As you may have already heard, the net result of the test is that Google syndicated ads drive more revenue to Yahoo! on fewer clicks, even after Google gets its cut. What’s not as commonly known is that Yahoo!’s own sprawling syndicated search network shoulders a considerable share of the blame for degrading much of that click value in the first place.

You would not be alone if you tend to think about the traffic from your Google and Yahoo! search campaigns as clicks generated from the search result pages of Google.com and Yahoo.com. But take a closer look at the referral traffic reports in your web analytics tool, and you will find that as much as half of that paid search traffic is driven by the thousands of partner sites which have entered into syndication agreements with the engines. As you scroll down the unending list of referring domains, you will certainly recognize some by name, especially the larger players in Google’s network like AOL, Ask and Comcast.net. Fewer names will ring a bell from Yahoo!’s network, which is comprised of search sites like Local.com, Toseeka and a vast array of very small players that vary widely by vertical. In contrast, MSN Ad Center has next to no search syndication.

In a recent post on SEO Book.com, Aaron Wall shed further light on the comparative size and composition of the search networks with references to published reports showing Yahoo! syndicated traffic as being about 55 percent of Yahoo!’s total volume compared with 41 percent for Google. Yahoo! also has a wider variety of referrers sending clicks to the average advertiser, about three-fold more than Google.

Why Search Networks Matter

Syndicated search traffic adds a lot of volume, which ultimately affects the actual CPCs that advertisers pay. Now, that effect would be lessened IF traffic from syndication sites converted at the same rates as that of traditional SERP ads or IF advertisers could easily make informed decisions to exclude less qualified referral traffic. As you’ll notice I’vecapitalized these “IF’s” because, to be honest, they’re pretty big ones.

Why Yahoo!’s Big Network Shrinks CPC’s

CPCs tend to rise to the highest price that competing advertisers will pay while still receiving an acceptable return on their investment. Since advertisers can not readily distinguish and manage the performance of the traditional SERP inventory separately from the syndicated traffic, acquisition costs for the two are blended together leaving advertisers no choice but to bid down CPC’s based on the whole network’s performance. Since Yahoo! syndicated traffic makes up disproportionately more of its overall inventory, it drives down CPC’s more overall and lessens monetization for ads on Yahoo.com. Until, one day, Yahoo! turns to Google to help it make a decent buck on its own best inventory, namely the pages of Yahoo.com itself. I believe this is what the CIA refers to as “Blowback.”

But enough about troubles in Sunnyvale. Let’s talk about what you can do to understand how syndication affects your search campaigns and how to get your best program performance without sacrificing desired volume.

• Determining Syndicated Search Performance: Yahoo! claims to discount CPC’s from poorer converting partner traffic, but you’ll have to take that on faith since neither Yahoo! nor Google provides impression, click and cost reporting by search network referral traffic. Google discounts its contextual network traffic with ‘smart pricing’, but does not publicize if it discounts in the search network. Bottom line is that you don’t know how much you’re paying for syndicated traffic or how many billable clicks it delivers, so you’ll have to rely on site visit and conversion data from your analytics program to make your most educated decisions.

• Finding Poor Converting Referrers: By comparing for a given keyword the visit to conversion rates by referring domains against that of Google.com or Yahoo.com, you can hone in on which referrers are truly underperforming. There are many, so this is not easy to do en masse on thousands of keywords without the proper statistical relevance calculations or very advanced Excel skills. A good start is to just look at your top traffic keywords where performance disparities will be clearest.

• Opting In or Out of Syndicated Search: Google has a campaign level setting that allows advertisers to opt out of serving on search syndication sites. However, it’s all-or-nothing. You can’t cherry pick which ones to exclude like you can with contextual network advertising. On Yahoo! you cannot opt-out of the search network, but you can exclude up to 250 individual domains. This is an account level setting, so be sure that domains you exclude are poor performers across all your campaigns. Also, note that it takes up to a few days for excluded sites to stop serving your ads.

• Quick Test for Budget Constrained Advertisers: If you are hitting against budget caps in your campaigns already and not nearly utilizing all the volume available, there is no harm in testing to see if you can boost performance by shutting off syndication. This is just a mouse click in your Google campaign settings. In Yahoo!, find your top 250 referrers (excepting strong converters if you can) and then add them to the domain blocking tool in the admin section. Results of this test will differ significantly by advertiser, but for some, it could be the easiest program boost around.