Surviving The Impending Yahoo-Bing Ad Transition

After a year of planning, engineering and collaboration by teams at Yahoo and Microsoft, it’s go time for the search alliance. Within two weeks we’re told, all paid search ads appearing on Yahoo will be powered by Bing through Microsoft’s AdCenter servers.

For members of the search alliance team, these next two weeks will almost certainly be equal parts excitement and stress. There’s a lot riding on the success and timeliness of this transition. Expect shallow breathing, sweaty palms, co-workers on short fuses, expletives filling the air and tempers flaring as the eyes of the search world, and more importantly, the eyes of Steve Ballmer are focused upon the search alliance team and it’s efforts.

By comparison, advertisers like ourselves will have it quite a bit easier during the transition. There’s little for us to do but hurry up and wait until the transition is completed. While it makes sense to make obvious campaign changes when we see big cost or volume swings, I am recommending more observing than optimizing for the near term. It is very likely that Microsoft and Yahoo will be making adjustments in their algorithms as the traffic scales through AdCenter and so unless you like chasing moving targets, it is probably better to exercise reasonable restraint before overhauling your optimization tactics.

While the search alliance teams are sweating it out, I’ve jotted down a short list of survival tips that paid search campaign managers like ourselves can do during “the transition.” I know my list will only scratch the surface, so if you have a few good ideas of your own, please leave your comments below and share them with your colleagues.

What You Should Do

The first thing you should do is to set aside time to re-learn how AdCenter really works. For a lot of us, it was easy to be less than diligent about AdCenter campaign optimizations when it represented less than 10% of all search traffic, and generated great ROI even when you set bids stupidly high. But now that upwards of 30 percent of your traffic will flow through AdCenter, you really need to understand it as well as you understand AdWords.

Even though text ad formats are nearly identical on Google and Bing, ad ranking, keyword harmonization, ad rotation and testing, demographic targeting and ad scheduling all function differently in AdCenter. At SMX East earlier this month, Kevin Lee of Did-it, and co-author of “Search Engine Advertising: Buying Your Way to the Top to Increase Sales” recommended that you specifically set aside budget for AdCenter testing for this very purpose.

Another good thing to do, if you haven’t already done it, is to duplicate your AdCenter campaigns and set the ad delivery for the duplicated campaigns for search partner traffic only on AdCenter settings screen, as shown below:

This will allow you to bid differently on the syndicated search partner sites, where ad performance and traffic quality isn’t always as strong is it is on the Yahoo and Bing websites.

While you are at it, grab the domain exclusion list from your Yahoo account and apply the exclusions to those AdCenter search partner campaigns. You can exclude up to 500 domains within AdCenter and these excludes can apply to content network traffic as well as syndicated search partner traffic. It is an unfortunate fact of life that while Yahoo has some terrific search partner sites, there are also tons of really spammy sites that can suck the profitability out of your campaigns, and you can’t just opt out of the Yahoo traffic by itself.

What You Should Not Do

You shouldn’t spend any time worrying about how to separately target and report on Yahoo search users versus Bing search users. It simply can’t be done, and according to Rob Wilk, Yahoo’s National Director of Search Optimization and Strategy, there’s no practical reason to be concerned about it anyway.

At the “Microsoft + Yahoo – Together at Last” panel at SMX East, a question was raised about the differences between the Yahoo audience demographics and conversion behaviors and the common understanding that optimization for Yahoo users requires different ads, bidding tactics and landing pages. Rob debunked that misunderstanding and explained that Yahoo and Microsoft had performed extensive testing against very large sample sizes and found absolutely no difference in how Yahoo and Bing audiences search, click and convert.

On the same panel, Rathna Sharad, Group Product Manager for Microsoft, also made the point that because AdCenter uses a different set of relevance filters, it is quite possible that the same Yahoo traffic coming through AdCenter could have stronger conversion rates, too. The difference is not in the demographic makeup of the audience, but in the different algorithms used to select and deliver ads.

In my own experience across our varied client accounts and industries, we have seen that Microsoft traffic tends to convert higher than either Google or Yahoo, and so we do not plan to spend any time worrying about the fact that we can’t report them separately any more.

What Microsoft And Yahoo Should Do Next

Once the search alliance dust has settled, blood pressures are back in normal ranges and everyone is breathing deep breaths again, we hope that Microsoft and Yahoo will get back to the drawing board and find a way to team up on the content and display networks.

Google’s most recent quarterly report shows that it is on track to sell $2.5 billion from display ads this year. While some of this growth may be due to expansion of the network, I’d be willing to bet that much of the growth resulted from improvements in the way the sell display network ads. Just a few years ago, Google was constantly taking it on the chin in blogs and ad search conferences about how bad their content network was. Since then they’ve reworked their content ad program several times, chipping away at the problems and ending up with improved targeting and simplified ad creation that takes much of the risk and effort out of buying content network ads.

Yahoo and Microsoft, please take note. While it is wonderful you have now given us the ability to exclude 500 domains once we’ve poured a lot money down the drain to identify really bad sites that should not have been part of anyone’s network in the first place, it would be even better if you allowed us to target all your partner sites more directly upfront. The more accountability and upfront targeting you allow us, the more display advertising budget we can confidently invest in your content and display offerings.

Kudos To Search Alliance Teams

I will admit that I was initially skeptical that the search alliance would be completed in 2010, especially given early statements that included contingency plans for a postponement until 2011. But here we are, mid-October and the transition is going forward and it sure looks like the alliance will be substantially completed on schedule!

It is stunning to consider what went into this effort. It is not easy for two rival companies to come together and work with such great singularity of purpose. It is a strong testament to the professionalism of the management, the vision of the designers and dedication and attention to detail of every team member involved that has enabled this triumph of technology.

Good luck pushing across the finish line!