SmallBizResource Blog -- Marketing

Google+Yahoo: You'll Feel It In Your Advertising Budget

Posted by Gayle Kesten Tuesday, Jul 15, 2008, 12:45 PM ET

Should the Google-Yahoo advertising deal comes to pass, you could find yourself paying more for search advertising.

Quick refresh: Last month, Google and Yahoo announced a nonexclusive pact that would allow Google's ads to appear alongside Yahoo's search results and on some of its Web properties. According to bMighty.com: "Advertisers will pay Google for its ads that appear on Yahoo searches, and Google will then pay a portion of the revenue to Yahoo. The deal, which is expected to generate $250 million to $450 million, lets Yahoo pursue other search partners and to deliver its own ads, as well."

That revenue has to come from somewhere. Says The New York Times: "It’s not a surprise that search advertisers are wary of Yahoo’s deal to have some of its search ads sold by Google. After all, that extra money that Yahoo is hoping to get from the arrangement is coming from somewhere: the pocketbooks of advertisers."

A new whitepaper from SearchIgnite, which sells software that helps businesses manage their search advertising, seems to bear that out. The company performed an apples-to-apples comparison of the cost per click of running the same keyword for the same advertiser in the same position on the page across each search engine and found keyword pricing could go up by 22 percent. In addition, the report also said "projecting the actual increased cost for a given marketer is highly dependent on the proportion of spending across the three different types of keywords analyzed and the ad ranking on the results page (e.g. first position vs. fifth position).

The three types of keywords are:

• Tail terms: words or phrases that are very specific and do not see high search frequency (more expensive on Google for all positions)
• Head terms: commonly searched keywords (more expensive on Yahoo for first three positions, then it becomes more expensive on Google)
• Brand terms: keywords that include marketers’ brand or product name (more expensive on Yahoo for first position, then about equal)

"Understanding these keyword price variations could help marketers better adapt to the expected price increases as a result of the Google-Yahoo! partnership," the report says.

Registration (free) is required if you want to access the whitepaper. On a related note, a Senate Judiciary subcommittee is discussing the pact during a hearing today.

Marketing