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Yahoo SM vs. Google AdWords
By Shawn Campbell (c) 2005

Yahoo has announced its new pay-per-click product: Yahoo Search
Marketing (SM). This product was formerly known as Overture, but
you may also recognize it as Goto.com, the name it went under
prior to 2001. In our experience, advertising with Google AdWords
has resulted in higher conversion rates than with Yahoo Search
Marketing (SM). However, both programs have advantages and
disadvantages. How does Yahoo SM compare with Google's AdWords?
Let's start by looking at how they differ (all amounts are in
USD).

Bidding

  Yahoo SM

* Yahoo places your bid at 1 penny over your next lowest
  competitor. Thus, if you bid $3.00 per click, and the next
  highest bid is $1.95 per click, you will only pay $1.96 per
  click.
* Yahoo allows you to see who you are bidding against and what
  they are bidding, so you know exactly where you will rank, and
  how much you will pay.
* Yahoo's maximum bid is $999.99
* Yahoo's minimum bid is $0.10

  Google AdWords

* Google doesn't tell you how much you will pay per click.
  Thus, if you bid $3.00 per click, you will pay anywhere from
  $0.05 to $3.00 per click.
* Google does not allow you to know how much your competitors
  are bidding per click.
* An advantage with Google is that you will rank higher if your
  click-through rate (CT rate) is better (a CT rate is the ratio
  of clicks on your ad to the number of times your ad is shown).
  Thus, you may have a better rank than your competitor, even if
  he or she bids more than you (because of your CT rate).
* Google's maximum bid is $100.00
* Google's minimum bid is $0.05


Low CT Rate Dropping

  Yahoo SM

* Yahoo will drop your keyphrase if the CT rate is ranked very
  low for a significant period of time. In actuality, this rarely
  happens. Your keyphrase has to perform quite dismally for it to
  get dropped.

  Google AdWords

* Google drops keyphrases with POTENTIALLY low CT rates. If
  Google deems that your keyphrase has done poorly for other
  customers, then your keyphrase won't even get the chance to
  make a single (first!) impression. This can be very frustrating
  when your keyphrases are very relevant, but Google won't even
  let them see the light of day. The flip side, of course, is
  that if your keyphrase's CT rate is good, you will get a
  higher ranking (even if you bid lower than your competition).


Showing Ads By Country And Language

  Google AdWords

* Google allows you to choose your country and language by
  selecting them in a dropdown box. Very simple, very efficient,
  and very effective.
* The language is based on the language setting of the visitor's
  computer. For example, if you are targeting Spanish Americans,
  than you will want to target the Spanish AND English languages
  because many Spanish Americans use English computers. Just make
  sure that you choose Spanish-only keyphrases.

  Yahoo SM

* Yahoo's system for countries and languages is downright
  miserable. You have to re-register for every country (and
  only twenty countries are available).
* Worse, you have to re-submit all your keyphrases and reset
  all your bids.
* What's more, each country has different criteria for
  submission. This means you have to rebuild your campaign for
  the USA, UK, and Australia. Canada is there, but you are not
  allowed to submit English keyphrases (?!?), only French (FYI:
  Canada's workforce is 73% English, 22% French). In Switzerland,
  you can submit in Italian, German and French; there is no
  language differentiation.
* Notable missing countries: Mexico, China, English Canada
  (which is grouped with the USA), South Korea, India, Russia...


Reports

  Yahoo SM

* Yahoo offers many useful reports. And while you can find just
  about everything you might need, it's left up to you to figure
  out which report contains the information you were looking for.

  Google AdWords

* Google offers customizable reports. You can ask for anything
  you want, and you will get it.
* They also offer to email you your customized report on a
  regular basis.


Keyphrase Comparison

I have bid on some keyphrases from February 1st to April 30th,
and held them in similar positions during that time. These
numbers are for search related impressions only. These campaigns
were not involved in content advertising.

"Okeeffe print(s)" - #3 position

Yahoo:                        Google:
1 click                       63 clicks
8 impressions                 1642 impressions
12.5% CT rate                 3.8% CT rate
$0.10 cost per click          $0.13 cost per click

"Ansel Adams photo(s)" - #5-6 position

Yahoo:                        Google:
20 clicks                     25 clicks
2401 impressions              2529 impressions
0.8% CT rate                  1.0% CT rate
$0.05 cost per click          $0.06 cost per click
    
Conversions

Our client February Point (http://www.februarypoint.com/)
counted emails + contact forms as conversions. Here is a
comparison from February 1st to April 30th.

"Real estate Bahamas" - #3 position

Yahoo:                        Google:
1037 clicks                   1557 clicks
19 879 impressions            35,348 impressions
5.2% CT rate                  4.4% CT rate
$0.34 cost per click          $0.45 cost per click
3 conversions                 13 conversions
0.30% conversion rate         0.84% conversion rate
    
Clearly then, Google AdWords is a better choice if you are
interested in clicks, impressions, and conversions. If you want
the lower cost per click for the same position, it would seem
that Yahoo is the better choice (though conversions are lower).

Competition

- FindWhat is possibly the third biggest pay-per-click (PPC)
  search engine, although there are a few that might be its
  equal: Kanoodle, GoClick, 7Search, Search123.
- E-spotting is very big in the UK, and competes heavily with
  Google and Yahoo in the PPC marketplace.
- MSN is getting ready to launch its own PPC engine to compete
  with Google and Yahoo (MSN currently uses Yahoo SM on its
  site). No date yet, but watch out for it.

Overall

To sum up, you will definitely have more control over your money
with Yahoo's system. It is more open and honest, and you will
pay less per click than with Google's system. Google does not
tell you why you are paying what you are paying, but it does
have the added bonus of rewarding you with rank for a better
converting ad.

Of course, Google does get more traffic and it converts better
than Yahoo, and in the end, isn't that what we're all looking
for? Thus, Google should be the winning choice for anyone that
is looking to convert clickers into buyers. Because after all,
who doesn't want to increase their sales?

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Shawn Campbell (shawn@redcarpetweb.com) is an enthusiastic player
in the ecommerce marketplace, and co-founded Red Carpet Web
Promotion, Inc. (http://www.redcarpetweb.com/). He has been
researching and developing marketing strategies to achieve more
prominent listings in search engine results since 1998. Shawn is
one of the earliest pioneers in the search engine optimization field.
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