Mark your calendars – as promised, February 5th is the date set that Yahoo! will switch over to a new ranking algorithm for their PPC ad platform. In the same way that Google’s AdWords works, Yahoo! will now factor in the ad’s quality as well as the bid amount. The old system awarded the highest position to whomever spent the most. Now they will consider how well the ad actually performs along with actual bid amount for each ad. This has been expected since Yahoo! started converting advertisers to their new platform but now has an actual date attached to it.
In an email sent last night to advertisers, here’s a quick summary of what will change:
- Both bid amount and ad quality will determine an ad’s rank in search results beginning February 5, 2007.
- This will replace the current method, in which ads are ranked by bid amount only (bid-to-position).
- This is designed to allow you to focus less on competitive bidding practices and more on the quality of your ads.
- By improving the quality of your ads and making them more relevant to users, you may be rewarded with a better ranking and/or a lower cost for your ads.
What determines “ad quality?” The ad’s historical performance (its click-through rate relative to competitors and normalized for position) and the ad’s expected performance as determined by various relevance factors considered by Yahoo!’s ranking algorithms, relative to other ads displayed at the same time.
There is no mention of the quality of the landing page but I’m sure if that is not already part of the algorithm, it is sure to follow.