Vinny Lingham’s Blog

My Yahoo has always been my preferred feed reader - to the angst of most of my friends.  Honestly though, I’ve played around with Google Reader and many others, and I always come back to My.Yahoo.Com.  I’ve been waiting for ages for them to do a decent upgrade - and I have been extremely impressed by the most recent one.  IMHO it’s the best feed reader out there, complete with all the AJaxy coolness you come not to expect from Yahoo!

I have over 100 feeds that I skim over daily, and the new version makes it effortless to do!  Give it a try and tell me what you think!

So with this new Panama implemention, Yahoo has started to become even more sticky about affiliate advertisers.  Unlike Google, they’re becoming tighter and I believe this is going to have a material impact on the way Panama’s numbers play out (i.e. substantially lower earnings than predicted).  Affiliate advertisers with Google are a large chunk of Google’s PPC spend in terms of market impact (not just the money that they spend, but also the impact that the added competition has on other advertisers).

What Yahoo doesn’t understand (and probably won’t anytime soon):

By allowing merchants to create their own affiliate policies, they will get more ads into their marketplace and all they have to do, is dedupe the ads, as Google & MSN does to ensure that their users receive the MOST RELEVANT ad, not the only ad that a merchant has uploaded.  GOOGLE DOES THIS!!! This is not technically difficult at all, and let me ask the question again: “Why does Yahoo insist on creating policies instead of letting their merchants decide for themselves - this is not customer centric at all!”

Affiliate Marketers are very often more savvy than the merchants they represent and will go after a larger and more diverse universe of keywords.  What is the point of trying to police merchant advertising policies if it does not contribute to having more relevant listings for YAHOO USERS!!!

If the (baseless) argument is that affiliate ad copy is poor, then do what Google does and disable the keywords for low CTR’s.

I see no reason whatsoever, to prevent affiliates from launching campaigns on behalf of their merchants (assuming they concur), as ultimately, we believe that the best model for managing paid search is NOT the typical agency % of spend, but instead on a mutually agreed upon success based relationship (ultimately, profit share).  We even wrote a special report on it last year - run this through any mathematician, and I’ll bet that they concur!

If Yahoo is trying to catch up with Google using these terms, they have a long way to go!  We spend a lot of money with Yahoo (we WERE budgeting over 7 figures this year, and we’re not the only affiliate out there) - and technically, all that is going to go out of the window.  If these terms get enforced rigidly, then we’re going to see Yahoo’s quality of listings drop (less ads per keyword per merchants, means less chances to get good performing ads), as well as less competition and spend from affiliates (which lowers prices).  This simply will translate into less revenue and way you slice and dice it.

Can anyone explain this logic to me, because it simply does not make sense?!

Ultimately, isn’t the end user (the searcher) best served by having the largest possible number of ads competing for his click, in order to find the best ones (which would be originated via the quality score).  What’s worse is that they allow 1 “Co-Brand” (Cough *Bullsh*t) site - which surely will just be abused. I am baffled.

At least Google gets it…

Here is the email we just received:

February 22nd, 2007

Dear Mr. Lingham,

Thank you for contacting Yahoo! Search Marketing regarding your UK account X.

The decline reason Site Ownership basically means in order for Yahoo! Search Marketing to provide a breadth of results for users, affiliates must take users to their own unique site and terms that relate only to the content on that site will be approved, as in our “Content” guideline.

Affiliate sites that link directly to their grantor’s site, either directly or through a frame, will not be granted terms relating to their grantor’s content, unless substantial information has been presented for that term prior to the link. This applies to shopping carts, secure servers, third-party databases or fulfilment engines.

Co-branded sites may bid on a search term only once, as in our “Duplicate” guideline.

Affiliates must also state that they are affiliates in their title or description. This can be achieved simply by adding “Affiliate” at the end.

To ensure that you will receive all necessary information regarding your account, we need accurate contact information for every advertiser. Please take a moment now to check your account contact information at https://secure.overture.com/login.do?mkt=uk&locale=en_GB and update it as necessary. You can edit your information in the ?Edit Profile? section of the Account tab.

Please do not hesitate to contact us if we can be of any further assistance.

Yours sincerely,

Customer Solutions

Yahoo! Search Marketing

I’ve just been playing with Yahoo’s latest Search Marketing Platform, Panama (officially launched to the public today), and to my dismay, by the time I got to second screen, I managed to find a (major) bug in their budgeting system (hint: right click view image below and then zoom to see the screenshot properly).

There’s obviously a major mathetical error in their calculations & code, because at a certain point in the estimation ranges, the calculation breaks (and basically points to an infinity function that is simply not there). There is a 6-point 0 data range on either side of the break point. This is over and above the volume/clicks/cost ratios being totally out of whacked. I applied a logarithmic budgeting curve in order to save time whilst doing the projections - the numbers are pretty inconsistent. I’ve documented the price breaks in this spreadsheet as well.

Update 14 December: I’ve had a lot of enquiries today to clarify the problems presented in this post - so here they are. It would be handy to have the spreadsheet open.

Basically, the analysis was performed in order to get an idea of the slope at which Yahoo’s bid prices would increase to the maximum CPC. In plotting this slope, I discovered that the increase in CPC’s was linear to a point, and then became logarithmic. Also, in the beginning, at low recommended CPC based on low daily budgets, the amount of impressions actually drops until your CPC moves past the 50c mark - very weird.

The more concerning aspect around this opaque budgeting algorithm is the point at which the system recommends a 0 value and also eventually at the midpoint of the twelve “0″ values, there is an infinity error, which basically means that the maths behind the algorithm receives a number that it can’t handle (like divide by 0). Also, once your campaign budget passes through the “0″ values and error, the number mysteriously jumps about 3 fold.

Without looking at the calculations, I can’t say what the problem is, however this will seriously damage any credibility from advertisers as it appears that there are massive increases in cost toward the end of the spectrum, after a break in the algorithm. It seems like Yahoo needs to hire some of Google’s Ph.D’s in math or get better Beta testers, like yours truly :-).

I just downloaded and printed (all 250+ pages!) the e-Consultancy PPC Best Practice Guide, which I must say is a fantastic piece of work!  If you’re not an e-Consultancy member, you should be, even if just to get this guide - but over and above that, they’re a great resource for affiliate marketing & online marketing information.  It’s got great information on how to run a Pay Per Click campaign and even for beginners or pro’s it’s a good roundup of best practice.  It’s probably the most up to date guide out there that I’ve seen in a very long time.  I highly recommend it for everyone in the PPC space - I’m still shocked at how detailed it is!  They charge $179 for this report or $269 for full access to all their reports - we subscribe to the latter.
Disclaimer:  There is no financial relationship between myself/incuBeta (other than the fact that we’re a paying subscriber) and e-Consultancy and they did not ask for this plug!

Brad Garlinghouse, a Senior Vice-President at Yahoo, had his internal memo published on the Wall Street Journal yesterday. This memo effectively admits defeat in the short term, and explains what Yahoo has to do in order to get it’s house in order, from Garlinghouse’s position. Here is a quick overview (read the WSJ article for a more detailed explanation).

Recognizing Our Problems

We lack a focused, cohesive vision for our company. We want to do everything and be everything — to everyone. We’ve known this for years, talk about it incessantly, but do nothing to fundamentally address it. We are scared to be left out. We are reactive instead of charting an unwavering course. We are separated into silos that far too frequently don’t talk to each other. And when we do talk, it isn’t to collaborate on a clearly focused strategy, but rather to argue and fight about ownership, strategies and tactics.

Our inclination and proclivity to repeatedly hire leaders from outside the company results in disparate visions of what winning looks like — rather than a leadership team rallying around a single cohesive strategy.

I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.

I hate peanut butter. We all should.

We lack clarity of ownership and accountability.

We lack decisiveness.

We end up with competing (or redundant) initiatives and synergistic opportunities living in the different silos of our company.

• YME vs. Musicmatch • Flickr vs. Photos • YMG video vs. Search video • Deli.cio.us vs. myweb • Messenger and plug-ins vs. Sidebar and widgets • Social media vs. 360 and Groups • Front page vs. YMG • Global strategy from BU’vs. Global strategy from Int’l

The Solution:

1. Focus the vision

2. Restore accountability and clarity of ownership

3. Execute a radical reorganization

4. Blow up the matrix.

5. Kill the redundancies.

Jeremy Zawodny, another Yahoo veteran, offers a slightly different view.  He agrees and disagrees at the same time, as posted on his blog.

I think, all things considered, that Brad is probably quite right - the overlaps and inefficiencies around having multiple products serving the same markets is shocking, to say the least. Yahoo should look to acquire the right companies, sell off the wrong divisions, and focus on building out what I think is already a fantastic platform business - and not just competing with Google on search, but also by leveraging what Jeremy Z and his team have done over at the API side of Yahoo. This is the future of the Semantic Web - we know, because we’re in the thick of it with Synthasite, a product that is arguably ahead of it’s time.