| 5:41 am on Nov 16, 2002 (gmt 0)|
Hey Jadakiss, it seems Yahoo's been actively working on ways to improve their revenue. It's highly likely that they've taken a hit after changing the SERP display and this may just be a way for them to make the changes needed to make more money. They are becoming really aggressive about finding alternative ways to generate revenue.
| 6:05 am on Nov 16, 2002 (gmt 0)|
Wow, seems like Yahoo has replaced Look$mart as this season's whipping boy.
| 11:38 am on Nov 16, 2002 (gmt 0)|
Yahoo's change serves users far better than previously. Looksmart's change didn't. Yahoo made a DRAMATIC improvement of its public product. Altering their rate structure would now be a natural next move, and would be another right move.
| 12:44 pm on Nov 16, 2002 (gmt 0)|
So you really think showing duplicate results of another popular SE is a smart business move and better for the public. WHY? We already can see these results at google. I see no method to their madness. It's just dum - if we want to see google results - we can just go to google. It's not even a mix - it's purely google. I can see if they mix it up a bit or make it different.
| 1:51 pm on Nov 16, 2002 (gmt 0)|
Google has google, Yahoo has Google plus more. How can that possibly be bad?
Their searches were pathetic, now they are very good. Great move. And I've got almost the exact same directory rank as I do in Google, and I am getting a lot more Yahoo referals, which makes me think the public likes the change a lot.
| 5:04 am on Nov 17, 2002 (gmt 0)|
No! Your getting more yahoo traffic because your site is in google and ranked well in google and therefore is now showing up in yahoo since yahoo replaced it's results with google. Not because more people are searching in Yahoo. Yahoo still has it's same client base that it did before - just different results. The average computer surfer doesn't even know enough about search engines to even realize that yahoo has changed it's results. Heck, some major Affiliate Program execs thath I spoke to didn't even know.
But if yahoo were to change it's directory back tomorrow - your free yahoo traffic would cease.
| 6:30 am on Nov 17, 2002 (gmt 0)|
As I said, my Google ranking and my Yahoo directory search ranking are basically the same, so your argument doesn't hold water. #9 is #9. What is different is that Yahoo users use the red arrow now, and this makes a big difference for me, and also, since my ranking hasn't changed, it is clear to me that more people are searching via yahoo, and more important, more people are searching *deeper* in Yahoo. Previously the results were garbage. Now queries get good results, which have users exploring the results more.
I'd be curious to know if anyone else went from an old #7 result to a new #7 result (or whatever) and are seeing a similarly large increase in visits.
| 9:03 am on Nov 17, 2002 (gmt 0)|
>> Previously the results were garbage <<
That's totally subjective.
In truth, the previous results were simply different. Their quality was actually perfectly OK, although limited on some niche searches. This latter factor could easily be addressed by auto-appending the Google results on the end, which would have kept everyone happy.
At this point in time the change looks to be a very bad decision in business terms... although of course we are not privy to whether there is something else around the corner that actually drove the change.
| 11:21 am on Nov 17, 2002 (gmt 0)|
Any results that aren't based on merit are garbage.
And if you think this is a bad busines decision you obviously haven't been reading the various news stories, particularly the role Overture plays in Yahoo's profit scheme. Great business move by Yahoo, and one they can proudly tout to their customers too. People who happened to lose the random top rankings they got in the directory need to look at the bigger picture.
| 11:48 am on Nov 17, 2002 (gmt 0)|
Excuse meee.... I'm sooo sorry for disagreeing with you.
"you obviously haven't been reading"... "need to look at the bigger picture"... etc.
I obviously don't have a clue what I am talking about then.
I'd do a little more reading if I were you.
| 12:52 pm on Nov 17, 2002 (gmt 0)|
Actually you were the one who disagreed with me, and said what was "in truth." Having a different point of view is okay with me. I hope it will be for you.
| 5:28 pm on Nov 17, 2002 (gmt 0)|
"whether there is something else around the corner that actually drove the change."
I think that's what it is.
Google results do nothing for Yahoo's bottom line, Inktomi, FAST, Directory and maybe others will.
| 5:52 pm on Nov 17, 2002 (gmt 0)|
Indeed, Powerstar. Any but a superficial assessment indicates that their income from the current situation MUST be lower than it was previously by virtue of lower directory payments. They have not overtly added a new income stream by ditching the directory and replacing it with Google, but have simply diminished an existing one.
They COULD have combined the two sources and aligned them in a number of ways, many of which would have retained the level of interest in the directory. They chose not to... and the question this raised from the day one of the new SERPS was WHY?
It seems very likely that we will learn the answer in the short term.
| 6:00 pm on Nov 17, 2002 (gmt 0)|
>> Previously the results were garbage <<
I absolutely agree, even though it was a devastating change for me!
Positioning used to be very easy to manipulate for anyone with more than one brain cell.
The only downside is total reliance on google, but at the end of the day, Yahoo WAS rubbish and google is the best SE which is why so many users are choosing to use it over the competition. Not an opinion, a matter of fact. If google ever turns to "mush", it will disappear!
| 11:56 pm on Nov 17, 2002 (gmt 0)|
|their income from the current situation MUST be lower than it was previously by virtue of lower directory payments. |
If you track their new additions you may be surprised to find that there has not been nearly as dramatic a decline in Business Express submissions as many predicted. BizEx submission revenue is still incredibly strong.
|They have not overtly added a new income stream by ditching the directory and replacing it with Google |
What they've done is further anchor the importance of their single largest revenue stream... paid search listings.
Even if they did lose all of their BizEx income (which they haven't) their sponsored listings generate far more revenue with far less manpower than their directory business ever could.
Enhanching this revenue stream even further means doing two things...
1) Adding more sponsored listings, which they've done, moving from three to four overture links at the top of each page.
2) Insuring that their users are happy with their search results, which they've done. Yahoo tested this new SERP display for months before rolling it out across their whole site. You can be sure that this change was more than just a blind stab in the dark... it was planned, tested, calculated, and implemented with great precision.
|the question this raised from the day one of the new SERPS was WHY? |
Hmmmm... let's see. Revenues are up, stock's up, Overture revenue is up, they've moved their emphasis from an incredibly high touch customer service nightmare (directory submissions) to an incredibly automated revenue stream (Overture).
Their stock holders are happy, Their accountant is happy, Their most important business partner is happy, and the end users that depend on Yahoo search are happy.
The only moaning I've heard has been from a small section of the SEO community that was dependent upon easily ranking keyword laden domain names in their former SERP displays.
And there, for every webmaster that is unhappy about the change, there is another that has increased their traffic by sitting pretty in the Google fed results.
|It seems very likely that we will learn the answer in the short term. |
Certainly there are many more changes to come... but if they didn't change a single thing in the next 12 months, from where I sit, (and their shareholders) they appear to have made some very sound business decisions.
Sure, if I had my way... things might have been done a little differently, but for all those out there scratching your heads and wondering why... dig a bit deeper, read the financial news, and the interviews with Yahoo itself, and their reasoning will not remain a mystery any longer.
| 2:43 am on Nov 18, 2002 (gmt 0)|
Excellent post Dante_Maure. Yahoo made an almost phenomenal business move that manages to be one of those rare things -- also dramatically better and more popular for users. They make more money, users are happier, and they get an objectively better product. And, their business model now focuses on their most profitable feature. And, they manage to put their much more profitable listings front and center in a way that is straightforwardly honest.
It's a win-win-win for Yahoo. Very seldom do you run across something so clearly right for a business to do.
| 3:50 am on Nov 18, 2002 (gmt 0)|
Agreed steveb. Though perhaps win-win-win-lose, with the last sector being the webmasters that counted on the Directory as their primary source of traffic.
The prior ranking system invited such an easy opportunity for manipulation that abuse was inevitable.
The only thing I can see that could have achieved all of the above benefits, while still encouraging more directory submissions, would be to give some additional boost beyond the red arrow to the sites included in the directory.
From what I can see, this is already happening in the adult sector so we may yet see this approach propagate to the rest of their search results.
| 4:29 am on Nov 18, 2002 (gmt 0)|
"Though perhaps win-win-win-lose, with the last sector being the webmasters that counted on the Directory as their primary source of traffic."
Yes, I was just speaking from Yahoo's perspective. Clearly many people who depended on a good directory ranking lost. Still, many people who got nearly zip in competitive categories (pay $300, get a search rank of #60 behind others who paid the same) relatively benefit in that the directory listings are more of a level playing field now.
| 4:53 am on Nov 18, 2002 (gmt 0)|
Guys at Yahoo! know what they were doing when they switched to Google results. They would have never done anything completely stupid to loose so much revenue. For all we know they might had even saved money by cutting off salaries to most of their editors. we will never find out what happened behind the curtain. What kind of a deal they had with Google?
Don't forget Y! is in the middle of the "sponsor listings" war between Overture and Google. What Y! did was a smart strategic move to keep everyone happy, even if it meant to lose some current revenue. The way Google's popularity is exploding and Overture revenues are rising, Y! scarified some of it's BizEx earnings for the future. And the future is already paying off with Y! stock and profits rising this month.
Lets stop complaining and adjust to the current situation, because this is the only choice we have if we want to stay in the game.
| 5:27 am on Nov 18, 2002 (gmt 0)|
|If you track their new additions you may be surprised to find that there has not been nearly as dramatic a decline in Business Express submissions as many predicted. BizEx submission revenue is still incredibly strong. |
True, but that's because people submitting new sites to Yahoo may not be aware that the search function is powered by Google and not Yahoo. If Yahoo made it clear that your site would be listed on Yahoo at the next Google update for free, Business Express submissions would fall dramatically.
|for every webmaster that is unhappy about the change, there is another that has increased their traffic by sitting pretty in the Google fed results. |
You're missing the point. If you submitted your site to Yahoo for $299 and you now find that 90% of your traffic that comes from Yahoo is from Google search results and only 10% is from your paid listing in the directory, you wouldn't be happy either.
Almost all sites listed in Yahoo directory will be in this position and many webmasters won't bother renewing their Business Express accounts after a year. This is where Yahoo will loose out.
Overture listings may increase Yahoos revenue short term, but in the long term Overture revenue will cancel out lost Business Express renewals.
|steveb: Google has google, Yahoo has Google plus more. How can that possibly be bad? |
It's bad because the two sites are almost identical when you're searching for something. This means less choice for users:
Google = Google Search Results + DMOZ + Adwords Select
Yahoo! = Google Search Results + Y! Dir + Overture
| 7:29 am on Nov 18, 2002 (gmt 0)|
|You're missing the point. |
My apologies Kerrin, but there's a difference between "missing a point" and disagreeing on it.
We'll just need to agree to disagree, and let's do our best to do so amicably. :)
These points have been covered in many other threads, so rather than revisit them here, a quick search through the Yahoo Forum's archives of the last 12 weeks will yield the full spectrum of perspectives. (and you'll find ample support for your views there)
|Overture listings may increase Yahoos revenue short term, but in the long term Overture revenue will cancel out lost Business Express renewals. |
I believe you may have a vast misunderstanding about the economies of scale here. Yahoo's directory submissions are a pittance when weighed against their paid listing revenues.
Of course no one but Yahoo is privvy to the exact figures, but you do the math...
A few figures you'll want to research before making such financial assessments:
Number of searches conducted daily at Yahoo
Average top four bids at Overture
Number of BizEx listings added daily
With these base figures to work with, factoring in even the most conservative guesses on the variables at play, you might begin to understand why their paid submissions are anything but their #1 priority in the big picture.
| 1:41 pm on Nov 18, 2002 (gmt 0)|
Dante_Maure: I agree to disagree, didn't mean to snap ;)
If you take a look here [searchenginewatch.com] and here [searchenginewatch.com] you can work out based on "Total Search Hours" that Yahoo gets about 50 Million searches a day (about 1/3 the number of searches Google gets).
If you assume that about 1/3 of these searches produce actual PPC results (16.67 Million) and that 20% of users click on a PPC search result, Yahoo will send about 3.33 million clicks a day to Overture.
Average bids for Yahoo search results based on Yahoo Buzz [buzz.yahoo.com] and Overture Bid Tool [uv.bidtool.overture.com] is $0.183. If you bump that figure up to $0.30 and give Yahoo 50% rev share that's an average of $0.15 per click or $499,950 in revenue a day.
If you take into account Business Express renewals from last year, new Business Express accounts set up this year and Yahoo directory [url=https://ecom.yahoo.com/fast/sponsor]sponsor[/url] listings ($50-$300 per month), they should easily be earning more than $499,950 a day in revenue from the directory. This revenue should increase every year if new sites continue to sign up and existing customers are kept happy so they renew their accounts. I don't think that will happen now though.
I'm not trying to say that the above calculations will be brilliantly accurate (I know they won't be), I just think it's a mistake for Yahoo to wreck a stable growth revenue stream in favour of a short term cash boost to keep shareholders happy :o
| 3:35 pm on Nov 18, 2002 (gmt 0)|
Good work Kerrin!... now of course I'll have fun nitpicking on a few points. :)
All of the following is complete conjecture of course, though I'd like to think of it as "somewhat sound" conjecture. ;)
|If you assume that about 1/3 of these searches produce actual PPC results... |
If you look at the top 1000 most frequently searched terms you'll find that about 90% produce PPC results. Even by conservative calculations it's likely that as many as 3/4 of the total searches done will produce a PPC listing, especially with the newly updated Match Driver system which was designed to drive up bid prices and capture more obscure keyphrase combinations.
If this estimation is even close, you can double your estimation of daily paid searches and the relative revenue associated with it.
|If you take into account Business Express renewals from last year, new Business Express accounts set up this year and Yahoo directory sponsor listings ($50-$300 per month), they should easily be earning more than $499,950 a day in revenue from the directory. |
First, I don't believe that Sponsored Listings should be factored into the equation. Being an ongoing monthly advertising expenditure, I would say it's not unfair to assume that anyone with the budget and desire to have their site come up first in the listings is more than likely still spending that money to achieve the same thing with Overture, and most are probably getting a better ROI to boot. (Based on every test that I've done and studied on the Cost vs. CTR of their Sponsored Listings program)
So, that leaves us with the actual directory listing fees.
Back in the "Golden Days" of instant high ranked directory listings with www.keyword-optimized-domains.com, I observed an average of about 125-150 new BizEx listings per day.
Even if we bump that up to 200 per day to account for sites that were declined, and multiply that by the double fee for Adult listings, and double it again to factor in renewals (which wouldn't be nearly 100% even if they hadn't changed the SERPS)... with all of these extremely generous over-compensations you're still not up to even half of your original estimation of daily PPC revenue.
Now factor in the following...
Additional expenditure for directory management:
-Annual Salary for over 150 editors
-Customer Service and Support
-Merchant Fees for processing the payment of each listing
PPC? None of the above.
|I just think it's a mistake for Yahoo to wreck a stable growth revenue stream in favour of a short term cash boost to keep shareholders happy |
Personally, I don't see where their very efficient and economical decision to focus on their single largest revenue stream is a "short term cash boost" at the expense of long term profits.
The end-user is happier, and the shift in emphasis is far more scalable for long term growth. The PPC revenue model scales almost effortlessly with exponential growth while a human edited directory becomes increasingly harder to manage and more costly.
While I can appreciate the points you're making, I'm no more convinced that what Yahoo's done is anything less than a sound and very profitable long term business move.
Kerrin, regardless of how close or far off the mark our estimations have been, I've certainly enjoyed the exercise. Thanks for playing. :)
[edited by: Dante_Maure at 4:01 pm (utc) on Nov. 18, 2002]
| 3:50 pm on Nov 18, 2002 (gmt 0)|
well, first off, according to the SEC filing by YAHOO dated 9/30/02, total revenue was 667 million for the first 9 months of '02. second, overture revenue represents approx 10% of that figure or approx 70 million. lastly, as YAHOO stock is now selling for $15 and change, i really doubt that any share holder who bought YAHOO in 2000 at $250 a share is very happy.
| 4:46 pm on Nov 18, 2002 (gmt 0)|
Awesome jacon... now we've got some real numbers to work with. :)
Let's way over estimate 200 paid submissions per day. (not including Sundays when they add almost no sites) On average 10% or less are Adult. (check the new sites pages to confirm)
This yields roughly 20 Million per year in new submissions. (make it 30 if you feel that %50 would have been likely to renew)
This with an enormous overhead expenditure.
Now compare that with roughly 93 Million in Overture revenue and virtually no overhead.
Pretty clear where the chips lay in this regard.
|as YAHOO stock is now selling for $15 and change, i really doubt that any share holder who bought YAHOO in 2000 at $250 a share is very happy. |
You're using the pre-bust stock prices as a point of reference for this discussion?
We're discussing the impact of the recent site updates.
As of 7 weeks ago before the changes, YHOO was trading at $9 a share.
Today it's up to $17.45
Are the share holders pleased?
| 5:06 pm on Nov 18, 2002 (gmt 0)|
While almost everyone agrees that the Yahoo Directory results were poor, there seems to be little discussion of WHY they were poor. IMO, the problem was twofold: directory searches of any type are quite different than searches based on a deep-spidered index. Second, the algorithm itself was flawed - keyword-heavy domains worked because that's the way Yahoo ranked sites. Compare that with Google, for example, which took generic DMOZ data and creatively overlaid PageRank data to create a different directory.
I think Yahoo will opt to have its cake and eat it, too. I.e., they are going to find a way to make the directory relevant again - mix directory results into the SERPs, somehow combine the Google and directory search, or display a separate box of directory results. $30 million a year isn't peanuts, and if they came up with a way to encourage or force renewals on grandfathered sites (e.g., preferred display for "subscribers"), it could break $100 million.
| 5:46 pm on Nov 18, 2002 (gmt 0)|
[buyandhold.tenkwizard.com...] marketing & services...404 million, primarily from the sale of banners,sponorships and text-link ads including OV agreement. for the 9 months in 2002 marketing and services increased 0.5 million or less than 1 % over the same period in 2001. fees & listings....212 million, primarily from access to Hot Jobs database, small business services, portal solutions,personals and search and directory listings. for the 9 months in 2002, fees & listings increased 106 million or 101% over the same period in 2001. clearly, revenue from fees & listings is a cash cow for YAHOO and they are not likely to toss it out.
| 6:13 pm on Nov 18, 2002 (gmt 0)|
|fees & listings is a cash cow for YAHOO |
Indeed, and directory submissions is an undisclosed fraction of the revenue generated under their fees and listings header.
|and they are not likely to toss it out. |
I haven't seen anyone suggest that they will, quite the contrary in fact.
This entire debate has been about whether their de-emphasizing the directory listings was a bad fiscal business move... and based on much of what we have covered it seems clear that, if anything, Yahoo's financial outlook is stonger than it has been in quite some time.
| 7:00 pm on Nov 18, 2002 (gmt 0)|
well it seems clear to me that alot of folks are upset with YAHOO changing their search results to a 100% google search. i believe this will change, mostly because its a non- exclusive agreement with google and yahoo will do whatever is required to keep their listing & fees revenue growing. its way to early to tell if yahoo directory renewals will decrease because of the google search thing but if it does you can be sure yahoo will react. BTW...in my view, for commerical listings, google is the biggest spam engine on the planet. i think yahoo added google for info type sites and has other plans for commerical searchers. mabe FAST?
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