We are midway through the most aggressive part of the Microsoft/Yahoo alliance traffic transition and there is intense interest in the economics of this brave new search world. Efficient Frontier manages over $1 Billion in spend worldwide so we thought it might be helpful to share what our relatively large sample of the market shows. As always, marketers should pay attention to their own data and make dynamic adjustments based on empirical insights.
AdCenter CPCs Up But Moderating
Like many, we are seeing an increase in CPCs on AdCenter. At one point, the seven-day average for AdCenter CPCs was up 15% versus the September baseline but they have recently backed down to about an 8% increase. One possible explanation for this increase is that right now people are struggling to find the right budget allocation and may have over allocated to Yahoo! ahead of the traffic change.
Historically, CPCs for Yahoo! and Bing traffic combined are about 25% lower than those for Bing alone. In the long-term we expect CPCs on AdCenter to revert to that norm as performance bidders adjust to lower conversion rates from Yahoo!’s partner traffic. CPCs may settle a little above historical levels as scale efficiencies enable smaller advertisers to access Bing traffic.
Clicks are halfway there but many of the Partners have yet to arrive
This week, we saw Microsoft’s AdCenter click share just reach the 50% mark but impressions have lagged behind.
It appears that this is because the traffic that has come over so far has been disproportionately Search traffic with Partner traffic being left behind. This means the traffic still being served on Yahoo! is largely Partner traffic with lots of impressions but not as many clicks.
Yahoo! Search is similar in performance to Bing so the transition to date has been relatively smooth. Expect increased volatility in the next two weeks as the remaining Partner-heavy traffic comes over.
Some important notes about Partner traffic:
– Domain Exclusion: As noted in a previous post, domains excluded in Yahoo! do not automatically port over. If marketers haven’t reproduced their exclusion list in AdCenter, those domains will be back in their account and presumably hurting the bottom line.
– Bid Discounting: Yahoo! was automatically discounting bids on Partner sites based on their assessment of individual Partners’ performance (they also provided features for setting your own partner bids and discounts). This bid discounting isn’t currently available in AdCenter so marketers can expect the Partners to see higher bids leading to more volume and higher CPCs from the least desirable Partners. AdCenter has some nice reporting tools for publisher performance. Marketers should pull them regularly to see how they are doing.
– Remember that these Partners are a significant source of volume and should not be shut off entirely. AdCenter does allow targeting of Partner and Search traffic separately which will let you set bids that capture this volume at an affordable price.
At times like these, with both volume and traffic quality changing rapidly, it is essential to bid and allocate budget dynamically at the keyword level based on data not suppositions.
If marketers are having to arbitrarily shift budgets in large chunks or, worse, turn off spend altogether they are losing out. The search world will continue to evolve rapidly and turbulence is going to become the norm (think Google Instant and Facebook on Bing). You need a platform that will let you adapt quickly.