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Yahoo Search Marketing Pay Per Click Advertising Forum

Yahoo profit falls 37%; net sales up 20%
Coincedence that Panama is Getting Rolled out With This New?

 5:32 am on Oct 18, 2006 (gmt 0)

Full story on Marketwatch:
Yahoo profit falls 37%; net sales up 20% [marketwatch.com]

Yahoo Inc. reported late Tuesday that third-quarter profit fell 37%, as higher advertising sales at its collection of Internet sites weren't enough to offset stock options costs and higher expenses.
Yahoo also said its board of directors has authorized the company to repurchase up to $3 billion worth of its common stock over the next five years. It's the second time in 19 months that the company announced a $3 billion share buyback plan.
The Sunnyvale, Calif.-based company said net income for the three months ended in September fell to $158.5 million, or 11 cents a share, from $253.8 million, or 17 cents, a year ago, when Yahoo, like most technology companies, didn't include option costs on its income statement.

Net sales are up, but profit is down. I wonder if they expect that the new system will mean that computers now look at the ads rather than someone in a cubicle, thus increasing their margin by ridding themselves of those pesky labor costs?

[edited by: engine at 11:26 am (utc) on Oct. 18, 2006]



 3:16 pm on Oct 18, 2006 (gmt 0)

Most big companies would love a 20% sales growth rate. But it's not enough when your stock's PE ratio is as high as some of these internet companies.

Panama doesn't scare me. So they'll have a computer look at the ads instead of a person. Big deal. And the ranking order might be different. I can live with that.

The big problem with Yahoo (I say this as an advertiser) is the horrible affiliates they have taken aboard. That's a good part of the reason the prices on YSM are dropping in some markets.


 3:40 pm on Oct 18, 2006 (gmt 0)

beren, can you elaborate on "horrible affiliates", please? PM me if it's not appropriate to place names here.


 4:27 pm on Oct 18, 2006 (gmt 0)

by that, I'm sure he is referring to some of their very questionable "search partners"...many of which are nothing more than sources of huge amounts of click fraud.


 4:33 pm on Oct 18, 2006 (gmt 0)

"The big problem with Yahoo (I say this as an advertiser) is the horrible affiliates they have taken aboard. That's a good part of the reason the prices on YSM are dropping in some markets."

I secound this ststement without a doubt it has caused them problems.
I don't need a pm if you have seen some of the worthless logs and gone to the garbage sites and then ask yourself how in the world would somebody find this junk 1 time but over and over.



 6:39 pm on Oct 18, 2006 (gmt 0)

The big problem with Yahoo (I say this as an advertiser) is the horrible affiliates they have taken aboard. That's a good part of the reason the prices on YSM are dropping in some markets.

Others have said this before, but I am hoping the more it gets posted the more Yahoo might listen up. Every person that I talk to seems to have a similar story with Yahoo/Overture. They all seem to be drastically lowering their bids or dropping Yahoo altogether. They ALL reference lousy performance. Where by Yahoo, for more money per click can not deliver even 1/10th the sales or leads that Google does. We all know

I recently got the Panama WebEx preview, and it appears to be a nicer, new interface, which is a great step toward making it easier to manage my ads, however I don't see Panama fixing this problem until they give advertisers the option to exclude sites and/or networks.

Furthermore, Yahoo, you NEED TO DROP many of these sketchy distribution partners... helping them improve the quality of their traffic is not enough- which is the story I got from one Yahoo rep at a recent ecommerce trade show.


 7:08 pm on Oct 18, 2006 (gmt 0)

dito on the crap affiliate sites and more to the point, not giving us the opt out option.


 9:19 pm on Oct 18, 2006 (gmt 0)

Why blame the affiliate sites? Bid less, it's a free market. If your competitors can't make a profit they'll do the same and you'll all be happy.


 11:59 pm on Oct 18, 2006 (gmt 0)

Why blame them? Becuase ROI with Yahoo is lousy ..that's what everyone here is saying and it's true. We went from thousands per day to under $70 and our sales never hit a bump in the road. What does that tell you about them.

Their search partners are garbage and anyone willing to pay them money for bogus clicks..well hey..more power to you


 12:27 am on Oct 19, 2006 (gmt 0)

I've gone from spending hundreds a day to about two dollars a day. And it doesn't matter. They have to give us opt out options or they will eventually fail. The money just went away from me (and now it goes to MSN and Google for now).


 12:39 am on Oct 19, 2006 (gmt 0)

If lead quality was so bad across the board it would be the same for everybody so bid prices would fall to a point where Y! would be hurt very badly but I don't see that happening at the moment. Either way, the market will decide. Click fraud unfortunately is a fact of life but I'd be surprised if any appreciable number of affiliates were involved in that because if they were caught out their businesses would disappear in a puff of smoke and all the SEs are getting more sophisticated at detecting it. Now competitors and bored kids - that's a different story, and how long would it take a half-decent programmer to write a viral script to make infected machines click randomly on PPC links? I've been expecting the demise of PPC for some years now and it's replacement with some form of CPA which I reckon will have to come sooner or later.


 1:25 am on Oct 19, 2006 (gmt 0)

Why blame the affiliate sites? Bid less, it's a free market. If your competitors can't make a profit they'll do the same and you'll all be happy.

Ok, not a bad point, however there needs to be more regulation on Yahooís part, itís their brand and reputation. The proof is there, advertisers donít mind bidding more for less, yet better quality traffic. Advertisers do mind poor quality traffic, itís a waste of their time, besides, what some these affiliates do most certainly borders on click fraud.


 2:43 am on Oct 19, 2006 (gmt 0)

We no longer use YSM except for branded terms. I would not run a campaing with generic keywords we lost a client over Yahoo. They simply would not believe that we did not know how bad the traffic would be. I do not take any chances any more.


 6:59 am on Oct 19, 2006 (gmt 0)

They simply would not believe that we did not know how bad the traffic would be. I do not take any chances any more.

Amen. Their sales pitch here was "we have 15 search partners" and I'm like why? There are only three search engines and you're 1 one of them. :)

Our relationship with the local subsidiary just broke down after we refused to accept that spending about US$100 a day without sales was normal, while we spent $3/ sale on google for the same term.


 9:10 am on Oct 19, 2006 (gmt 0)

While I was analyzing our PPC traffic a couple of weeks ago, I noticed the huge amount of terrible traffic that Yahoo was sending our way.

I was just about to cancel our account and drop them like a hot potato, but then I realised that on average (content and search networks) Yahoo has the same eventual cost-per-action as Google has for just the search network.

In short, this means that if we could opt-out of the Yahoo 'partners', the cost-per-action from Yahoo would be far better than Google. However, the utter rubbishness of the Yahoo 'partners' means that the average is dragged down.

Personally, I'm happy to drop Yahoo as soon as their cost-per-action drops below Google's, purely so that I never have to use their terrible ad management interface!


 11:21 am on Oct 19, 2006 (gmt 0)

"what some these affiliates do most certainly borders on click fraud"

Can you be more specific, without breaking the TOS?


 12:11 pm on Oct 19, 2006 (gmt 0)

Here's a click fraud example that I have seen time and time again:

Take a VERY successful (and legally questionable) music/movie download site and slap random high value text ads on it (knowing that the tech savvy users will click occasionally to support the running of the site). Source the adverts from several 'search partners' to reduce the amount of clicks going through each account (since many search partners have 'networks' of their own and are only too happy to take any traffic). Know that these search partners are unlikely to be dumped by the originator of the adverts, if they are dumped there are plenty more to move on to. Be prepared for the gravy train to stop at some point (but know that one network - not neccessarily tied to aone of the big 3 - will still take you through desperation)

We have had first hand experience of the 'networks' that can grow under one questionable partner, leading to many branches on the click fraud tree.

A major problem for Yahoo, or any PPC network, is that once you allow 'search partners' you need to keep a good eye on them, and that also means keeping a good eye on how they keep an eye on their 'partners' etc...

We've seen a lot of eye-popping stuff because we are very close to one of the better Yahoo search parners, and in fact a partner of theirs (making us 2 steps away from Yahoo). We monitor things with almost a religious enthusiasm (and we don't have any partners of our own to look after) and because of this have been asked to help identify click fraud on a small part of the Yahoo 'search partner' network (which is very time consuming given the amount of techniques employed).

It's a complex problem with what should be a simple solution. Each direct partner should be responsible for fraud on their downstream network, if they can't control it then they should be dumped. The problem with this is that, contractually, it is difficult to do (as often the proof is hard to find several layers down).

Maybe Yahoo should take the monetary savings it's making from reducing human input into YSM reviews and employ more click fraud experts to root out the bad apples.


 1:10 pm on Oct 19, 2006 (gmt 0)

Or make their system that monitors conversions tie back into a transparent screening tool we can use to bid tiers of ad distributors at different levels. Somehow, they need to sort out the crapola by giving us information (scoring, quality, etc). Without it, many are reducing their bids for the pool and it's killing Yahoo's overall revenues. Question remains, can they muster the will power to maintain quality or will their drive to add partners that can "get clicks" leave them empty handed losers in the search engine wars...


 4:01 pm on Oct 19, 2006 (gmt 0)

So it looks as though the beef is not so much with search partners as partners of search partners or even partners of partners of search partners. I was under the impression, though, that Y! specifically bans these unless they have been vetted and approved by Y! employees. Is this not correct?


 4:25 pm on Oct 19, 2006 (gmt 0)

Sales up and profits down, yawn.... They say expenses are up ect.. Just like you and I, Yahoo has to spend money to fix stuff, improve, and invest in thier future. This is not signal of anything except that they spent more than usual.


 4:45 pm on Oct 19, 2006 (gmt 0)

partners of partners of search partners...

Correct, that's the problem that I was trying to get over.

As for Yahoo employees looking over every site (or more often than not, network of sites operated by the applying entity), it just does not happen. It certainly does on the direct partners of Yahoo, it probably does on the initial sites for partners of partners (remembering that new sites can appear at any time), but beyond that is pushing it.

A specific example of this is we launched a new site just yesterday (our first new site for around a year), it already carries YSM adverts (which will only make up 5% of earnings from the site - and there isn't any traffic to talk about at the moment) and I'm certain that Yahoo have not manually reviewed it. There is no problem with this new site as we are completely above board but once you are accepted (and hence trusted) there may be temptations for some to turn to the dark side.

The main problem may not be from hard-up publishers turning rouge; it's more likely to come from wolves in sheep's clothing. People appearing legit with a site or two initially, then adding their other sites later.

Even worse is the temptation to create pseudo ppc networks which then go on to get traffic from anywhere (think paid to browse), have you ever wondered how such dodgy places show adverts that come from much bigger networks?

If every level gets just a little bit dodgier, it doesn't take long for fraud to kick in.


 2:11 am on Oct 20, 2006 (gmt 0)

They know their partners are committing click fraud and sure to benefit from the results of their activity.

If your business partner committing a fraud and you know about it and share the profits. Aren't you guilty of fraud?


 4:01 am on Oct 20, 2006 (gmt 0)

Completely agree. I pulled a pretty large chunk of money from them, just like money others here.

I also agree it seems they chose to turn a blind eye to what should amount to fraud concerning their 'partners'.

They've got nothing to do now but try to sucker newbie advertisers - all the experienced ones (who spent big $$$) have left them.


 2:03 pm on Oct 20, 2006 (gmt 0)

and explain to their stock holders why they've lost $22B in market value and why they claim lower online ad revenue spending in the same marketplace where G grew 70%.

my Y advertising is at an all time low, and i'm not alone.

i won't run ads in a ghetto, they don't pay a return.


 5:34 pm on Oct 20, 2006 (gmt 0)

I have almost completely stopped my campaign with Yahoo.

If you do ANY kind of tracking on your PPC traffic it's almost amusing what you will find.

Yahoo is supposed to be the second largest search engine, yet "partner" sites that I have NEVER heard of and are completely irrelevant to my niche would often outdeliver Yahoo itself on traffic by a factor of 10 or more. Then you take a look at conversions and maybe 1 in 1000 visitors would convert from most partner sites where my average conversion is 1 or 2 for every 10 visitors?

As I said...it's "almost" humerous.


 7:45 pm on Oct 20, 2006 (gmt 0)

Nothing new here. Yahoo doesn't allow you to block ad partners, thus, advertisers with decent tracking are slashing ad spend. Its hard to believe that Yahoo does not recognize this. We talk about it all the time. When they send out surveys, I tell themt this. I have large ad budget and Google is going to get 85-90% of it because I can't get the 15% to Yahoo.com that I want to.

[edited by: SchoolChum at 8:03 pm (utc) on Oct. 20, 2006]


 8:59 pm on Oct 20, 2006 (gmt 0)

they can't see the forest for the "trees"... or is it "thieves"?

Tropical Island

 1:32 pm on Oct 21, 2006 (gmt 0)

Yahoo doesn't allow you to block ad partners,

What's even worse for me is that I'm getting clicks from places I don't want with my US account. I had to disable another keyword yesterday because a parked domain type in suddenly started getting clicks from South America. All links on this site are Yahoo paid links. I only have search activated.

Does anyone know if the new interface will allow geotargeting? I would bet not as they seem to be oblivious to the fact that their search links are being splashed all over the world.

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