Lesson #42 SE Update Part #2: Yahoo's Paid Inclusion War!
Written By Cyndalie

Drastic changes have taken place at Yahoo at the end of February 2004 that has both marketers and small internet business owners alike scrambling. The decision by Yahoo to drop Google in favor of its own full on money driven mixed natural/sponsored index, will affect over 50% of all websites dependant upon search engine traffic in both good ways and bad. To completely understand what has happened, let's review a timeline of Yahoo's corporate and search activities:

7/00 - Yahoo selects Google to power search result matches and drops Inktomi.

11/01 - Yahoo partners with Overture for Sponsored Matches listings that appear before and after Web Search Results.

10/02 - Yahoo renews relationship to use Google's results as part of its search listings.

11/02 - Yahoo integrates Google with Yahoo Directory results for Yahoo Web Search results.

12/02 - Yahoo announced plans to purchase Inktomi for $235 million dollars.

2/03 - Overture announces their plans to purchase Altavista for $140 million dollars, as well as to purchase FAST Search (AllTheWeb.com) for $70 million in cash.

5/03 - Yahoo rolls out improvements in search interface which displays Yahoo Directory sites (denoted by red arrows) integrated within the definable Overture (Sponsored) and Google (web page) powered results. Rumors begin about Inktomi integration.

7/03 - Yahoo announces plans to buy Overture for $1.63 billion.

12/03 - Yahoo finalizes all deals and completes acquisitions.

2/04 - Yahoo begins deploying new algorithmic search technology including crawler Yahoo Slurp and beings phasing out Google powered search results.

2/04 - Yahoo announces paid inclusion details and SiteMatch program.

2/04 - Yahoo announces the phase out of Altavista and AlltheWeb engine databases which are to be replaced by Yahoo results.

Notable Quotes about the “Paid Inclusion Crisis”:
"At Google we don't have paid inclusion,” a Google representative at this week's Search Engine Strategies conference said. “We pride ourselves on organic listings not paid search.”

“The first problem I see is that Site Match tries to determine what my cost per sale should be by pre-setting the prices,” Internet consultant Russ Jackman said on the e-Business forum WebProWorld, “Sorry, Yahoo, the numbers just don't add up.”

About SiteMatch
Ok guys, here is how Yahoo's new paid inclusion system is set to work. SiteMatch is a program that combines pay per click and paid inclusion and powers Yahoo's Web Search result matches. Web site rankings are determined by optimization, not by keyword bidding, for Yahoo Web Search Results.

Yahoo now has 3 paid inclusion options

1.  Yahoo Directory:

A listing in Yahoo Directory is $299 per commercial website and $599 for adult sites. No changes here.

2. Yahoo Web Search Results:

Paid inclusion guarantees your site will be included and reindexed every 2 days and you pay a cost per click fee. Submit to Yahoo via Site Match at http://www.content.overture.com/d/USm/ays/sm.jhtml

Annual listing fee for the first URL is $49. For the next 2-10 URLs it is $29 each. For the 11th URL up to 999 the fee is $10 each URL. For more than $1,000 paid URL listings you should contact Yahoo directly.

In addition to the Annual Listing Free, a Cost Per Click FEE is also charged against your SiteMatch account balance. This means you will pay $0.15 to $0.30 per CLICK dependant upon the category type each URL falls into. Tier 1 Categories are 15 cents per CLICK and include Adult listings. Too see the pricing breakdown for all categories go to http://www.content.overture.com/d/USm/ays/sm_pricing.jhtml

IMPORTANT!!!
Listing in Yahoo requires an annual listing fee AND a cost per click fee. You must maintain a positive balance to keep your URL active.

Your ranking using SiteMatch is determined by how well your site is naturally OPTIMIZED. The spider will pull the title and description from your web pages for each URL listing. The spider will reindex each paid included URL every 2 days, which is great for sites with dynamic content (updated regularly) as well as for optimizers who wish to tweak and test their pages for higher rankings. HOWEVER, the higher you rank for your optimized URL's you pay to be included, the more you pay.

Put this into perspective a moment. Adult traffic is rated at .15 cents per click. This means if you pay 50$ per year to have the URL included via SiteMatch, you must also maintain a positive account balance which .15c will be deducted every time someone clicks on your listing.

If your included listing generates a top ranking and sends you 5,000 clicks per month, your yearly cost is $9050.00 PER YEAR for that one URL! Before you pay to have your URL included, take a long term look at what it will cost you not only to be indexed, but each click your ranking listing generates. Sometimes it may not pay to be ranked #1.

3. Sponsored Results:

These are powered by Overture's Pay For Performance program. This is a KEYWORD BIDDING program where whoever pays the most money per click gets the top listing. This is not just for Yahoo; it's for traffic from all Overture powered "Sponsored Results" engines like MSN and AltaVista. There is no limit to what you will pay per click, it's dependant upon what you bid and requires almost daily maintenance for bidding and budget control.

Free Submission Form
Finally, Yahoo rolled out it's free URL submission form that does not guarantee placement but may get you crawled in the engine. This is what most optimizers should be using if you are not paying to get included: http://submit.search.yahoo.com/free/request

Things to Think About
It is important to remember that you will pay per click from each engine that is powered by SiteMatch, such as Altavista and All The Web and not just Yahoo.

Yahoo should spider all included URL's, so it is suggested that if you pay to have your primary URL indexed (and pay per click) hypothetically it should spider the rest of your site and index it for free. They are not giving any guarantees.

It may be a good idea to use a test page URL for your first Yahoo/SiteMatch paid inclusion URL so you can test out how the new algorithm ranks pages and get as many others indexed and ranking for FREE. For testing purposes try to use a promo domain sub page and target a low searched key phrase so you can not only see what it takes to get a top listing, you can keep your budget low and drop the listing if paying per click does not work for you. Using a sub page can help with tracking traffic and sales generated by the paid listing and cost per click return on investment ratios.

When thinking Yahoo's new program through, it just does not seem to work for free site owner's dependant upon sponsor commissions. This may change the current economy regarding affiliate programs where only program/site owners can afford that type of bottom line. There's not way affiliates could sustain that type of yearly traffic budget on commissions alone. For example, if you use a 25$ payout per signup sponsor program and it converts your paid for Yahoo traffic 1:300, it would cost you $45.00 per 300 clicks based on $0.15 per click. This would leave you eating -$20 per sale.

My recommendations for webmasters are to hold off on paying for anything from Yahoo at this point. Past trends regarding big business acquisitions have shown me that typically one change breeds another, and with so much money to be made by Yahoo different types of traffic may end up being either sold/outsourced or costs may be redefined. Use the free submit pages and try to exchange links with sites that are currently ranking in Yahoo now, to better your chances of being spidered which may happen sooner than waiting for your submitted URL to be crawled. I also recommend taking a look at other Cost Per Click type engines for traffic, where you can get traffic for much less than $0.15 per click. For example, if you paid $0.05 per click in a CPC engine like Kanoodle, your ROI for the example above is +$10.00. There is still profit to be made and targeting new traffic sources can be a solution.

Before you panic and make any decisions, take a good hard look at the long term, keep marketing in all the major engines (not just Google or Yahoo) and try to maintain an even exposure in all the major indices.