I just received an email from the Yahoo Search Marketing team that discusses how they will be changing the pricing model for search ads run through them. It is not 100% clear to me exactly how this will work, so I will cut and paste the email below and follow up with Yahoo to find out the core details to this pricing update.

As you know, when you advertise with Yahoo!, your traffic can come from both Yahoo! sites and partners’ sites in our distribution network. As part of an ongoing effort to strengthen our marketplace, Yahoo! plans to soon expand the adjustments we make to click charges based on our assessment of the performance of traffic coming from sources within our distribution network. This will include deeper discounts on click charges for lower-performing traffic, and potential premiums on click charges for higher-performing traffic. We expect to launch this enhancement in late August or early September 2009.

This change is designed to further align your click charges with the performance of the traffic that you receive.

How this Affects Your Account These adjustments will be based on our assessment of the performance of the traffic source, and will not be affected by the quality of your ads. Based on our analysis, we expect that most advertisers will see click charges drop or remain unchanged, while a small fraction of advertisers may experience an increase in click charges.

As always, you will never pay more for a click than the amount you specify as your bid (including any bid adjustments you may make for desired audiences).

Yahoo sent me some more information, let me quote it:

As our notice to advertisers says, based on our analysis, we expect that a majority of our advertisers will see click charges drop or remain unchanged, while a small fraction of advertisers may experience an increase in click charges.

Our goal is to align click charges with the performance advertisers receive to help them derive maximum value from our network. The exact level of impact to an individual advertiser depends on a number of factors and is specific to each advertiser, so we cannot say whether click charges will increase or decrease for one particular advertiser.

Related Topics: Yahoo: Search Ads

About The Author: Barry Schwartz is Search Engine Land's News Editor and owns RustyBrick, a NY based web consulting firm. He also runs Search Engine Roundtable, a popular search blog on very advanced SEM topics. Barry's personal blog is named Cartoon Barry and he can be followed on Twitter here. For more background information on Barry, see his full bio over here. See more articles by Barry Schwartz