As Yahoo! evolves its search algorithm and pushes forward with its Google partnership, we need to be clear that Panama is not and never can be adwords in function, nor in spirit.
On Google, there is a long tail. If you are smart enough to recognize a search term that others are not bidding on (or doing so minimally), or have optimized an obscure term, you are rewarded. You have a relatively minimum bid landscape to reduce your cost and you can isolate the phrase to maximize ROI. You can even go further and isolate the match type, recognizing that someone who types in a phrase exactly might (and often does) behave very differently than someone who clicked on a broad match delivery. As the markets mature, others jump in, raising the price of the keyword (and thus Google's revenue), and you move on to another group of phrases. It works out well for the advertiser, as they get more sales, and it works for the searcher, as we have to be smarter about what we put in front of them and how we treat them post-click.
Yahoo! however does not care. After all, why let you get a click for $0.25 on a long tail term when they can map that term to a more popular one and drive a $1.00 cpc? It does not matter to Yahoo! that the post click behavior is different. Nor is Yahoo! willing to take the long-term view (like Google) that will not only deliver higher quality search results, but could actually increase their revenue by helping develop the number of phrases that have value to advertisers.
Think about the Google deal. Yahoo! has far fewer phrases on which advertisers are bidding, or terms on which they are bidding very low. This was imposed on advertisers because of the mapping of larger groups of keywords to a single keyword or phrase. There was no value in bidding on these keywords, and Yahoo! did not care; they forced an artificially higher cpc that could not be optimized. Google, however maintained a system where we can optimize to the long tail, making our ability to optimize based on post click behavior easier, and thereby increasing the value of these long tail terms. Now that Google has fostered the market for these terms, Yahoo! is going to de-map many of their terms (they have already started), so that they can benefit from the mature market that we were able to create with Google.
Unfortunately, the inventory on Yahoo! is going to dilute the value that was built up in the Google ecosystem... not that Yahoo! cares; they'll get their revenue. Yahoo! would not work with us (advertisers) to develop the value within their own search product. Instead, they waited until the value was created within Google, and then decided to de-map keywords for advertisers in order to serve up the Google ad. If the metrics on Google's adwords program are skewed, then we have to drop the bids or drop out of the keywords. For those who think Yahoo! won't be big enough to matter, remember, we are dealing with a large number of low volume, long tail terms. Small changes make a big difference in the back end metrics.
Beyond the search terms themselves, Yahoo! match types are not optimization friendly either. On Yahoo!, if you are bidding on a standard match basis (meaning you show up when the user types in your keyword / phrase), you can be trumped by different terms that are on advanced match bidding (meaning Yahoo! decides there is some relationship between the search and the keyword). Yahoo! has made it so this is likely, based on the bid amount. So, even if you have an exact / standard bid against a keyword, Yahoo! will see what other keywords in your account might actually qualify, and then de-dupe the keywords based on ranking... The bid amount is very influential. Look at the impression distribution, it varies widely from day to day. Yahoo! will tell you that is because users' search patterns change widely day-by-day. Our experience shows us otherwise... there are trackable patterns, not wide swings.
(We know that this is also technically possible on Google. But, you can see your impression share in Google reports that clearly indicate that your exact match keywords are not getting pushed aside. Yahoo! has no view into this.)
Unlike Google, Yahoo! does not encourage multiple match type bidding. It doesn't matter that their are two different post-click behaviors based on the match type. The system was designed to lump everything together, and then see where they (Yahoo!) can make the most money.
What Yahoo! has not figured out (that Google figured out a long time ago), is that the post click value is what advertiser care about. Yes, they give lip service to this concept. But, when they deliver a search product that actually backs up the rhetoric, we can start to believe that they get it. Give us: true match type bidding, keyword delivery unfettered by mapping, real reporting, truly targetable negative keyword implementation (match type, no limits). Until then, they will follow well behind Google with a me-too (Panama) product that appears designed to maximize short term per-click revenue while giving no care for the long-term devaluation of the Yahoo! product.
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