By Duncan Parry, Search Engine Watch, 27th January 2012

After a year’s delay, Microsoft adCenter will start to power the PPC results on Yahoo UK in Q2 of 2012. Discussion of its potential for success aside, here are some useful links and an action plan for preparing UK campaigns.

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By Duncan Parry, Search Engine Watch, January 6th 2012

Predictions are popping up everywhere as the New Year begins. Instead of producing another list of things that are likely to happen, here are the five things I’d like to see happen in 2012 but in reality probably won’t.

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By Duncan Parry, Search Engine Watch,  July 20, 2011

Friends. Followers. Contacts. Circles. Social networks can be fun and productive for work or pleasure.

But social networks are also time consuming – more than most of us probably care to admit. With the average person reported to have 130 friends and growing on Facebook alone, the continuous flow of updates from individuals and organizations is overwhelming. From that page you liked on Facebook, to that industry pundit you follow on Twitter, and many others in between, everybody is updating, tweeting, posting, liking, checking in, sharing, +1ing…

Here’s the thing. It’s too much. Admit it. You’re overwhelmed.

I’ve declared a few times on Facebook and Twitter my plans to carry out a cull. A few people or pages get dropped. But…what if that person notices? What if that ex-colleague goes to work somewhere interesting? What if I miss that industry announcement or insider tip? Better not be too harsh, better stay connected.

I’m now on five social networks – four public ones and one closed network for work (Yammer). This week I’ve faced the truth: it’s too much. Time for a cull. But where to start?

Facebook

I know instinctively that Facebook is my personal space – it’s where friends and family share photos and post personal updates. It’s where I go to get away from work – not to blend the personal and professional.

Step one: un-friend work-only contacts and pages. Step two: move them to LinkedIn or Twitter depending on their social media activity; do I want to only keep in contact with them (LinkedIn) or read what they have to say (Twitter)?

Twitter

I maintain several accounts for myself and work, and the work accounts have clear objectives and strategies. My own, I freely admit, doesn’t. It’s a collection of personal and work interests, and I’m a generous follower.

Time for a change. This is the worrying bit – do I follow my instinct, and cull anybody I don’t regularly find useful? Will I miss out? What will happen to my follower volume? Should I care?

I’ve decide to not rush in here – analyzing hundreds of followers and then making bulk changes, whether un-following or adding them to lists, isn’t particularly easy and I’ve yet to find a tool with all the functionality I want to speed this up. Instead, I’m removing accounts I don’t find useful when I see messages from them – cleaning up my Twitter stream as I go.

LinkedIn & Yammer

LinkedIn is the easiest to keep under control – I’m cautious of adding anybody who approaches me (especially recruiters). Yammer, as a B2B network, is even easier to keep relevant – I have 100 percent control over groups and who I follow (OK, so I’m an admin, which helps.)

Google Plus

Now that’s a blank canvas. So how will I avoid repeating the mistakes I’ve drifted into on Facebook and Twitter?

Circles. I’ve immediately setup three – Work, Family & Friends and Acquaintances. I know I’ll add a further one for “Hobbies & Sports” when businesses and organizations have official pages. I might split my work circle up in future – but I’m keeping them small, and have already started consciously ignoring some followers who I don’t want in my circles.

Social Media Relevancy

If I used to be your friend on Facebook, or I no longer mutually follow you on Twitter, sorry. Relevancy has been one of the underpinning characteristics of the biggest success story of digital – search – and the same applies to social media.

Life’s too short, too busy, and too rushed for the irrelevant. For that attitude, I won’t apologize.

So, another day, another Google announcement that shakes the foundations of social and search strategies. Or does it? Here are our initial – and I stress initial – thoughts on Google +1. Right now we’re focusing on the search side of this as that’s the initial thrust of Google’s announcement, and where most consumers will encounter this functionality first.

What is Google+1?

Simply put, it’s Google’s equivalent of the Facebook “like” button – a way of saying “I like this” or “I recommend this”. Of course, Google aren’t using the word “like” anywhere in their PR.

Consumers can click it in both paid and natural search results – for the former, advertisers have to add it as an option. It’s very important to note that consumers need to be signed in to a Google account (AdWords, Analytics, Gmail etc) to see the button and click it. We have to wonder how many consumers are aware they have a Google Account as a result of using one of Google’s products – it’s not something Google have historically promoted.

If you are wondering about your own Google Account at this point, see this page and login to see which products Google associates with your login – and edit your Google Profile. Yes, you have a Google Profile too. Which brings to me to where Google+1 “likes” appear.

Your Google Profile

If you have a Google Account, you have a Google profile. It might not be public, you might never have filled it in, but you do. You can check yours here https://profiles.google.com/

When a consumer clicks the +1 button, this recommendation is shown in their public Google profile. As shown by Mashable’s example :

Will this Impact Search Results?

Yes. Google have stated this will affect SEO/natural search rankings. So, if your brand gets lots of +1 clicks, it could boost your position in results as Google views your site as “recommended” and therefore of interest to it’s consumers. No guarantees, as ever with Google.

Of course, there will be companies who try to “game this”. We already seen a brand encourage retweets as part of a competition, for example, on Twitter. Brands and their agencies will need to decide what they can do to encourage these clicks without crossing the line – and of course, Google will continue to develop their algorithm to counter such efforts; no doubt a sudden flurry of +1 clicks will be seen as of less value that a continual steam of them that suggest genuine “recommendations”.

This also means every time you click the +1 button you are effectively working for Google, helping them improve their results.

Paid Search and +1

PPC advertisers can opt to include the button on their ads. UPDATE: Google tell us will be enabled for all PPC adverts if the searcher is logged in. Then, when logged in consumers can click it and their friends (as determined via Google’s Profile system) will see they did so, as show in these two images from Google, where “Brian Walker” clicked to recommend an ad.

Will this Change PPC Quality Score and Rankings?

No. Google have clearly stated that unlike natural search, this won’t be used at the present time to determine rankings etc. No surprise – there’s an even clearer financial gain to gaming this if it did impact QS and therefore CPCs.

UPDATE: Whilst it might not affect Quality Score, it could increase CTRs and therefore have a beneficial advantage in PPC.

Beyond Search

Like Facebook’s “Like” button, Google will offer a version of this for brands to put on their websites – so start putting real estate on your site aside now.

This is when the +1 button will really take off – consumers may not be logged in, ignore it or not know what it is in search results. Engagement rates on features like “block site” and earlier feedback mechanism in search haven’t been high. On the websites of brands they like, however, they are much more likely to click the +1 button.

Big Brands Gain the Most?

One of our initial reactions to this here is that big brands will gain the most. They have the brand awareness, brand search volumes and onsite traffic levels to attract the most clicks via SERPs and more significantly via their websites when they’ve integrated the button – just like with Facebook’s button.

We’ll blog more and speak to our clients direct as we assess this more, but for now, here’s the initial action points we recommend:

1.     Educate your colleagues – they’ll start seeing the button on English language searches soon (send them this blog’s URL!)

2.     Warn your developers you’ll need some screen space in the future – unfortunately, date TBC from Google on the onsite button at the time of writing

3.     Discuss this for PPC with your agency – will your brand be recommended? Will this improve your CTRs – or a competitors to your disadvantage? Will Google’s Profile network actually connects your consumers and their friends? The penetration of Google in the UK at 90%, for example, won’t translate to that sort of penetration into consumer’s friend network via Google Profiles (did you know you could have one until today?) You can opt out – see the end of this post.

4.     Discuss your SEO and Social integration strategy with Steak. This is something we’ve been doing with clients for some time – in fact, we first engaged in the Yahoo Answers for brands awareness and SEO reasons for a client back in 2008. We’ve written about SEO and Social regularly on Search Engine Watch too.

5.     Open a Google Profile, and try this out for yourself – that’s the best way to understand it further.

Conclusion

This will be big – because it’s from Google. The real growth in +1 clicks will be once it’s onsite and not just in SERPs; but for search it is now part of strategies going forward.

In social, this could be the way Google finally manages to attract consumers to it’s social platform – whatever that will look like beyond a Google Profile – but it’s early days. It’s not a Facebook or Twitter killer, that is for sure; if anything, Google will try to be the place your profiles merge and connect across social networks and their product network.

The question is: do you actually want to connect those worlds? We’ll leave that hanging in the air for now…

We’ll post more search and social thoughts as our analysis of this develops.

Sources:

Google’s +1 Announcement
Mashable’s original post

UPDATE: We’ve just had an email from Google UK – sign-up to find out when the onsite button is available here.

UPDATE 2: It’s not opt in for PPC; it’ll be turned on as standard (above edited accordingly). AdWords customers can request an opt out here.

By Duncan Parry, Search Engine Watch,  Mar 2, 2011

In January, Google introduced a useful addition to AdWords that potentially makes managing negative keywords across multiple campaigns a lot easier. Maybe it was because January is such a busy time of year, but it’s a feature that seems to have passed by many advertisers. Here’s a recap.

What are Negative Keyword Lists?

Simply put, a central place to store master list(s) of negative keywords and apply them to multiple campaigns. This is an improvement on the old way of doing this in AdWords, when you had to laboriously copy and paste negatives between campaigns – a process which can mean copying 1000s of words for a mature campaign that’s been built out over time.

Accessing Negative Keyword Lists

The lists are easy to access. In AdWords, simply click “Control panel and library” on the left of the screen, and select “Negative keyword lists”.

In the example above, you can see that I’ve already got a list in place of 127 keywords applied to 4 campaigns. You can create multiple lists and apply them to different combinations of campaigns. This is useful if you want to apply a master list of negatives to all campaigns, and another, separate list to only a select few – for example if your product range is limited in some regions, but not everywhere.

Creating new lists is easy – just click the “New negative keyword list button”, name the list and paste in the keywords. Of course you’ll need to spend some time consolidating existing lists across campaigns – more on that later – and then you’ll need to apply them to campaigns. That’s where I am afraid AdWords interface design provides something of an obstacle.

Applying Negative Lists to Campaigns

Using this feature, it feels like Google designed it without thinking through the workflow involved for existing campaigns – i.e. most of their customers. Once you have created lists, there’s no easy way to apply them to multiple campaigns. Instead, you have to go into every single campaign and then apply the lists(s) that are relevant to that campaign.

Here’s the process:

1. Click “All online campaigns” on the menu on the left of your screen
2. Click the campaign to apply the list to
3. Click the “Keywords” tab
4. Scroll to the bottom of this screen
5. Click “Negative Keywords”
6. On the right of the inflated lists that appear, click “Keyword Lists”
7. Click “Add”
8. Click “Add” next to the negative keyword list you want to apply
9. Repeat across multiple lists
10. Click “Save”

Unfortunately, you need to repeat these steps for every campaign – there’s no way at the time of writing to select multiple campaigns and apply the same list(s) to them all at once – which would have been a real time saver. There’s no way to apply them to multiple accounts within the same MCC, either, something that would help with enterprise level accounts like national retailers.

Negative Keyword List Deployment Steps

Interface gripes aside, negative keyword lists are a worthwhile addition to any AdWords campaign. Here’s some steps to follow to get the most out of them:

1)     Download your account via AdWords Editor;

2)     Sort the columns in Excel and delete all of the rows and columns with anything other that negative keywords and the keyword type in them;

3)     Use these to plan the lists you need – I’d suggest a “Whole Account” list of terms you’d never, ever want your ads to appear for, and then any more specific lists you need around those you have in AdGroups or only in some campaigns in the download;

4)     Re-arrange the negatives in the download to populate these lists and save them;

5)     Add any additional terms that spring to mind, or you can find via SQRs or keyword tools;

6)     Save the master list(s) and then start adding them via the procedure above;

7)     Update your campaign build out process to include applying these lists to any new campaigns in future.

Negative keyword lists will no doubt become a standard of AdWords campaign management – hopefully Google will improve the interface over time and add support via AdWords Editor and the API, too.

By Duncan Parry, Search Engine Watch,  Mar 2, 2011

Many agencies, publishers, and advertisers across Europe have been sent documents by the European Commission (EC) recently, requesting detailed information about the online advertising marketplace — and about search marketing and AdWords in particular.

This is part of an investigation into Google and antitrust. While a response isn’t mandatory, questioning from industry bodies has elicited a response that suggests the commission can, if it wants to, make it compulsory.

I’ve been critical of Google’s market dominance in the past and still firmly believe strong competition in every area of their business is good for the industry and for consumers. But while reading and answering the overlapping questions in the two documents my agency has received, I feel a growing unease that the bureaucrats who will ultimately pass judgment on Google may do more damage than good.

The questions in the documents fall into several broad categories:

• Define the digital services you provide and therefore the marketplace.
• The extent to which campaigns need to differ per country and to what extent that poses barriers.
• Scenarios around when ad spend would be switch away from horizontal PPC ads (i.e. AdWords) to other platforms or ad types.
• A surprising number of questions around how easy it is to port data between AdWords and other platforms, how easy Google make this and if it could be done “by a programmatic tool.”
• Questions about the AdWords API, legal agreements with Google and anyway Google tries to restrict the use of other platforms.
  It’s the questions about porting campaigns and the API that worry me. This isn’t one question but a series, probing for details of current processes, in-house and external tools, and the time and money involved — all asking if Google makes this difficult.

We all know that a copy and paste of a campaign from Google into adCenter or any other ad platform won’t bring the best results — the systems have different campaign options, treat search strings and match types differently, have different consumer user bases, etc.

I wouldn’t want to use a “programmatic tool” to dump campaigns into other system from AdWords.

Do I want to download them, open them, edit them to fit each platform and then quickly upload them? Yes. We all know how to use the various search engine editors and Excel today.

This feels like a line of inquiry a competing ad platform would push hardest — we all know there’s been lobbying. I’m not accusing any one company and I trust the EC has processes in place to prevent bias. I’m just wondering aloud if this is the most useful direction for the commission to proceed in.

What worries me is this is exactly the sort of narrow-minded approach to the market that could lead to a ruling that’s bad for PPC — at an extreme, ordering Google to add a “port” button to copy campaigns to adCenter or other systems — with no reference to the poor performance that may follow. Knowing how to get the best out of different ad platforms is a skill in itself.

Hopefully the detailed answers being written by search experts will steer the commission toward more genuine areas of concern, such as Google’s practice of contacting big advertisers directly without telling their agencies (I saw an example of this the other day, unsolicited by the client) or locking-off top AdWords slots for its own products — and that’s before we talk about DoubleClick or their market share as a whole.

Martin Sorrell never said a truer word when he described Google as a “frenemy.”

This topic will be a slow burning one in Europe — and in all likelihood, by the time the bureaucratic wheels have finished turning, the marketplace will have changed again, anyway.

By Duncan Parry, Search Engine Watch,  Feb 2, 2011

Following its successful rollout in North America, Microsoft and Yahoo are focusing on rolling out the Search Alliance in Europe, starting with natural search results on Yahoo UK.

This move is largely welcome. With a UK market share of less than 10 percent for Yahoo and MSN, it makes more sense to manage campaigns on one interface. Right now, Yahoo staff are being trained on adCenter in preparation for moving their clients’ campaigns over.

Filling in my agency’s response to the European investigation into Google, I had to list a number of features of the AdWords platform. We all know the depth and breadth of development of AdWords outpaced Yahoo (and Overture) and comparative newcomer Microsoft a long time ago.

But where are the beta trials from Redmond? Where are the new initiatives, the new ideas from engineers that will differentiate the adCenter platform from AdWords, raise the revenue per search Microsoft receives, and grow loyalty with advertisers?

Try as I might, I can’t remember the last “big” change or enhancement on adCenter since Microsoft launched a desktop tool similar to AdWords Editor.

Parallel Races

It’s easy to sit outside a company and poke holes at their strategy. Microsoft has lots of intelligent, hard-working people who are pushing their search efforts forward — sometimes despite other people internally, I suspect.

They’ve built a search engine, created a PPC platform, and started to take the fight to Google (but let’s be honest, Yahoo’s been the main loser and Ask was already fading away).

As Bing introduced new features and received attention, Google seemed to wake out of a slumber and started rolling out new features in search results, continued its relentless development of AdWords and, with increasing speed, the development of its display business through DoubleClick.

So the foundations are firmly in place from Microsoft. They’re gaining traffic from their Yahoo deal and their own activities. Bing keeps adding new features.

But where’s the innovation in adCenter? I’m not talking blog posts, research reports, or tools around-the-edge (which they are often good at); I’m talking hardcore, at-the-center innovation that every advertiser, big or small, will be able to use. Things like Google’s sitelinks — self-service, enhancing search results and, crucially from a revenue per search basis, raising CTRs (and often ROI for advertisers — leading to increased budgets).

Several races are happening in parallel here. Market share is one, but there are others (e.g., innovation in PPC, further exploiting the connection between display and search).

Microsoft and Yahoo have strong experience in display and have done some work in this area — but Google is catching up, fast. They may not have the premium level display inventory Yahoo and Microsoft have access to, but with remarketing in AdWords Google has made the sort of retargeting once considered the preserve of the most well-funded advertisers available to all.

Search marketers are adopting this tactic in droves — but only on Google’s platform or through third parties — not adCenter.

What Could Microsoft Do?

So, if I think Microsoft should be innovating more in PPC, what would I suggest? The obvious example, sitelinks, bears some thinking about.

Sitelinks undoubtedly offer convenient ways for site owners to channel consumers into the right section of a site following a one-word brand search or ambiguous generic. The format and mechanics could be different — sitelinks can be improved in terms of reporting data and control over which links are shown.

Is this copying an idea and developing it further? Yes. After all, Google wasn’t the first PPC engine — they took the idea and added engineering rocket fuel.

Several other areas spring to mind — things Google is already doing, but not always that well: local information in PPC ads, incorporating feeds to enhance PPC ads (more control of which products display for which searches would be a start), and the ability to buy non-premium display inventory via adCenter for retargeting.

There are probably much better ideas out there, not to mention the ones bubbling away in the heads of engineers at Microsoft.

Do I feel Microsoft is distracted by the challenge of onboarding an increased volume of traffic, new advertisers, and training Yahoo!’s staff? Yes.

Do I hope we’ll see a burst of innovation on adCenter afterward? Yes.

But underlying concern is it’ll be too late — Google will have moved ahead in all these races, and there will be new ones opening up that adCenter won’t be equipped to enter. That will be bad for all of us in search — especially those of us in a market where Google already dominates 90 percent of searches.

By Duncan Parry, Search Engine Watch,  Nov 19, 2010

The search industry never stops. From AltaVista to Google, and GoToast to Search Ignite, the fortunes of companies and technologies evolve over time.

I was reminded of this recently when training new hires. They’d never head of names like AltaVista, Excite, Lycos, etc. — companies that defined the search space less than 10 years ago.

So, how do you keep up to date?

Ignore the Noise

It’s important to recognize that there are many, many blogs and articles published about search every day — and many more “experts” on forums and Twitter and in Facebook and LinkedIn groups.

You can ignore most of them. The ability of the search industry to report on, discuss, analyze, argue about, and regurgitate a fact until it has been distorted out of all proportion and attained myth-like status is legendary. There’s a lot of noise — so you need to spend your limited time on sites that are credible and, most importantly, correct.

It’s also important to note that the search engines are no longer search companies — they offer much broader product lines; so you will need to keep up to date on developments in all their products, too, as search is often integrated into them (and paid search revenues pay for them).

Select an RSS Reader

I can’t think of an industry news site that doesn’t have an RSS feed — so choosing a good reader is crucial. There are many available. I use Google Reader to collate and organize feeds by topic in folders as it’s tied to my Google login and easy to use on any computer, iPad, or mobile.

I often use Feedly linked to Google Reader as it offers a slicker interface that feels closer to a magazine. Another bonus of Google Reader is that you can add any URL to it — not just RSS feeds — and Reader will monitor the page for changes and present them as if a feed has updated.

Many sites offer several feeds — follow those most relevant to your area of work and interests; it’s easy to overload yourself with feeds and find you have more than 100 articles to wade through every morning. Pretty soon you’ll find you’re too busy to bother, and end up reading nothing.

Keep an Eye on the Mainstream Press

Sometimes announcements by the search engines receive mainstream coverage — or a story breaks about a negative issue, like the recent Google Street View privacy coverage. Add the technology sections of mainstream sites like the New York Times, USA Today, BBC News, etc., to your reader to ensure you know the stories your clients (and their bosses) are reading over their breakfast.

Digital Overall

To keep any eye on the wider industry I follow a few key sites — Mashable, The Next Web, Robert Scoble, John Battelle’s Search Blog, and Econsultancy, to name a few.

The Search Stalwarts

There are a few search-focused sites that are must-reads. Search Engine Watch and Search Engine Land are the two heavyweights; I receive their newsletters every morning as well as follow their feeds; they provide a summary of the most important search news and topics. Search Engine Roundtable is also important and often have details of new Google tests or rumors with some basis to them as reported on other sites or forums.

There are of course many other digital industry and search sites — the above sites link to good sources as they cover stories, helping you find other sources.

Don’t Forget To Cull

One last piece of advice: don’t forget to delete feeds. Over time, sites change editor, or their focus shifts or their writing declines in quality. So when a site seems to publish nothing of interest, delete it — your time is precious.

By Duncan Parry, Search Engine Watch,  Oct 22, 2010

Recently I posted some tips for paid search newbies. This time, I’m focusing on five ways the stakeholders employing PPC experts can help (or hinder) their efforts.

Communicate!

I still hear of situations where agencies or in-house teams are told days (or even hours) beforehand of a site change — whether it’s a page moving, new product launch or worse, lots of changes. Sometimes they find out only when performance drops.

This never ceases to surprise — search has been around long enough for many marketers to know that on-site changes have an impact on campaigns and sales figures often suffer as a result.

Let everybody know about a likely change, even if it’s not signed off, so they can plan resources, assess any impact on performance, and provide feedback that might improve performance even further (especially in terms of SEO and AdWords quality score optimization). A “mundane” change might be the opportunity to use technical resource already secured to make additional changes that will have a positive impact.

Go Beyond The Click

Many brands give their experts the scope to significantly boost their traffic and achieve their KPIs — but don’t involve them formally in what happens post-click.

Optimizing landing pages can significantly improve quality score and aid SEO — that’s a given. Perhaps more significantly for the bottom line and senior management, combining this with optimizing all the steps to sale can create a further step-change across all traffic sources, not just search.

Recently, I helped a client’s internal team go from a 2 percent to 9 percent conversion rate in one redesign, which helped them exceed targets and invest more budget.

Optimizing pages and the path to conversion, as well as campaigns, creates a positive feedback loop; as every dollar spent on traffic works harder because the site works harder, so keywords or placements that were previously ruled out on a performance basis can come back into reach — exposing the brand to more consumers and potentially increasing market share.

Google knows this — hence Google Optimizer being provided for free.

Automate

PPC can become extremely time consuming — especially if inventory changes on the website a lot, whether in terms of stock levels or prices.

Feeds are a perfect way to automate much of the change required, and some paid search tools can work with them to automate this work. Yet many brands don’t have adequate feeds in terms of content, quality, or frequency of update.

Educate Upwards

A scenario I’ve encountered many times:

1.Campaign starts.
2.Initial data is used to optimize, changing average positions.
3.Client’s boss phones up and angrily asks “Why aren’t we number one for keyword X?”
4.Agency receives a worried or irate phone call or e-mail.
5.Agency diverts time to answering this with a presentation for the boss, meaning they have less time to make the client money by further optimizing campaigns.
This doesn’t need to happen. Much of this time can be saved by educating upwards.

Explain to senior stakeholder that positions are based on achieving targets, not ego building. This is a fundamental step in managing expectations — and yet so often, doesn’t happen and PPC experts find themselves under largely unnecessary pressure born of misunderstanding.

Challenge

After the initial launch period, it’s easy for campaign reporting and meetings to become repetitive and even stale. Challenge the teams — asking what they would do in perfect world of unlimited budget and resource (within reason!) can kick start interesting conversations and ideas — especially if you throw the doors open to other digital channels, the website itself, and business processes.

A client recently started a meeting with several agencies by saying “There are no sacred cows — everything is up for discussion and change today.” I wholeheartedly agree.

I doubt there’s a single PPC team that doesn’t have a mental wish list of three or four things they would fix if they were in control — tap into that. Your sales figures may well thank you.

By Duncan Parry, Search Engine Watch, July 30, 2010

The Yahoo-Bing search alliance is gathering momentum. Watching this coverage from the U.K., where Google has close to 90 percent market share, I can’t help asking: will the deal succeed for both parties — and what does success look like?

Focusing on the Numbers

For Yahoo, the obvious win is cost saving — no longer employing staff or maintaining systems to process billions of searches a year and monetize them. We’ve already seen several waves of layoffs from Yahoo, including search staff.

For Bing, revenue is the win. More searches to monetize means more paid search revenue (although Yahoo will receive payments from Microsoft). Alongside this, they will no doubt hope to attract new advertisers from Yahoo’s bank of accounts, raising competition between advertisers, and therefore bid prices — further adding to their bottom line.

This is the virtuous circle any paid search division wants to fuel — more advertisers, increased keyword coverage resulting in an increased average number of advertisers per keyword, increased bid completion, and a higher average revenue per click.

This is the circle that both Overture and Espotting worked hard to fuel at the start of last decade when paid search was in its pre-AdWords infancy. Working at Espotting, I experienced how keyword coverage and bid competition were major concerns — and when the company lost Yahoo Europe as a distribution partner, I saw the circle slowing, coverage shrinking, and CPCs falling. Bids that once reached a high point of £15 (“serviced offices”) fell beyond the £3 mark as volume, quality and CPCs fell.

Which brings us to the risks…

The Risks for Yahoo

The risks for Yahoo are around revenue, market share, and brand differentiation. If the average revenue per click Yahoo receives under the deal is significantly lower than from Panama, they will suffer financially. However, the operating expenses they save may outweigh this loss. Overall, they will be in a better position.

Aside from CPCs, the long-term risk for Yahoo stretches beyond search into their wider business.

Yahoo has stated they intend to continue differentiating themselves via their search interface. Fine in theory, but there’s real risk here.

Doing this without a large search team of the ability to reach inside the machine is difficult. If consumers learn over time that Yahoo is effectively Bing, and decide there’s no reason for them to stick with Yahoo, will they go directly to Bing?

Inertia often rules our behavior as consumers, but with Bing running advertising campaigns and offering cash-back schemes to attract consumers, the lack of a unique search experience on Yahoo may be enough to push some consumers to go straight to source and get cash back on their purchases into the bargain. The word “frenemy” springs to mind.

Any lack of search market share could impact their wider business. Content is undoubtedly part of Yahoo’s core strategy — even more some with their acquisition of Associated Content — and one of the main ways visitors get to this content is via search.

So any decline in the flow of traffic from Yahoo search into their own properties will hurt their revenues from display advertising — and undermine the data gathering that is at the core of the behavioral advertising, ad exchanges, and other initiatives that in turn are crucial to Yahoo’s non-search advertising revenues.

Yahoo search traffic isn’t their only source of traffic and data. They receive traffic from the other engines and other areas of their properties, and they gather data from display ads across many other sites as part of their wider network (just like Microsoft does across its network).

Yahoo will have to innovate to ensure they can offer search retargeting for their display clients. Right now, Microsoft and especially Google are innovating in this area.

So for Yahoo, the risk is a decline of overall market share — and revenues beyond search alone.

The Risks for Bing

The obvious risk: the numbers don’t add up, and the revenues from the Yahoo deal are less than the costs of the partnership to Bing, even if they have increased their market share. This could vary significantly by country; in some, Bing-powered Yahoo may prove profitable; in others, average CPCs may make the deal less attractive versus costs.

The other risk is less obvious and more damaging for Bing’s ambitions. What if Yahoo’s users don’t like Bing search results?

If Yahoo’s audience perceives a decline in the quality of results, they may shift to Google — hurting both Yahoo and Bing in the process. However, Microsoft is investing a lot of money, time, and — crucially — talent into their search division, so this seems, on the surface, unlikely.

So, Will it Succeed?

I believe it will be a success — in terms of revenue, and in terms of market share (Google won’t be seriously challenged anytime soon, though).

The real story will be what Yahoo does next, and how the frenemy relationship works out while they compete in the display and mobile spaces — and Google builds their display armory around AdWords and DoubleClick.