Yahoo about to pull the biggest trick of all time?

Reason to believe that Yahoo is going to a PFI/PPC model for entire engine

[kanetrain]

Please keep in mind that this post is speculation based on comments from a Yahoo employee and some other factors. I've drawn my own conculsions from that conversation and pieced it together with some other reports (of preliminary test groups) and general observation about Yahoo and current trends.

I think that this has been discussed in the past and maybe some have talked about it before. At any rate, the fllowing is...
PURE SPECULATION:

I believe that Yahoo is about to go to a PFI/PPC model like Looksmart. You'll pay to get included and then you'll pay for each click as well. Yahoo shopping is the preliminary model and if it works, I think they will try to take the exact same model and push it over to the regular search engine. You'll pay to get your site listed in Yahoo and then you'll pay for evey click to your site through the main search engine. Your PPC adds will be mixed in with free listings.

I can't reveal sources, and I don't know how reliable they are. Even if they are 100% accurate, now I don't know if they would actually go through with it (especially given the recent FTC concerns). Still it's definately a possibility.

Anybody else hear rumblings of this? I'm very concerned about this type of Looksmart model being used at Yahoo.

[glengara]

Any mention of what they would use as a starting DB?
Solely existing directory/PFI would be too small, IMO.

[Chndru]

Reason to believe that Yahoo is going to a PFI/PPC model for entire engine

And the reason is?

[Compworld]

To make $$$.

CompWorld

[jim_w]

LookSmart stock is at $1.38 when I wrote this. Near junk bond status. Yahoo is at 41.77. Now why would they want to go to that model?

[worker]

Yeah, it really worked for Looksmart, so it must be a good idea.

If they actually do this, it will be the beginning of the end for them, or at least is will give their competitors a real shot at their users.

A change like the one you mentioned would negatively affect the directory. Gradually the majority of the content sites in their directory would leave, and as their database grows smaller, it will open up the opportunity for a Google portal, or a new and improved MSN or AOL to make a serious move.

It is these types of moves by the larger portals that leads to a death by tiny cuts. Little by little the dynamics of the portal changes in an effort to make (more and more) money month over month, and the portals lose their momentum with the smaller players. Since there are only so many larger players, anything that causes the smaller player to begin to turn away is a death nail.

Look at Google. No PFI. Free inclusion. Free crawling.

Growth!

If Yahoo goes down the path you've described, I will buy every share I can of Google's IPO when they finally go public, because it will only be a matter of time before Google acquires Yahoo's seriously depressed shares (once the PFI model strangles them).

[juniperwasting]

I think the big difference between LS and Y! is Y! has is it's own beast. LS relied on the M$ contract, and as it dies, so can LS.

Y! could be betting on the huge customer base it already has to force webmasters into paying them for listings.

[kanetrain]

Like I said, a comment from a Yahoo employee started to get me thinking. And I
I agree that Looksmart is horrible, but Looksmart was dependant on other companies for traffic. Yahoo isn't dependant on anybody. They have the search traffic and they can do whatever they want with it.

[worker]

They have the search traffic and a nice directory for now, but if they make changes like you described, both would be in jeopardy.

The MSN/Looksmart search results sucked. I believe it is because of inherent limitations in the PFI model.

The only webmasters that would pay for that type of approach are the ones that can cost justify it. Guess what happens to all the webmasters with really good sites that have business models that don't support it. They would leave. And as the good sites are taken out of the Yahoo directory/search results, Yahoo is more and more at risk.

Who knows though. It would be fun to watch all the fireworks as people began to run for the doors.

[ogletree]

Yahoo used to base the top results on your title in the Yahoo directory. It cost money to get in the business side of their directory. (PFI). In the old days I could pay my money and if I had the title just right I would be in the top 3 for phrases in my title. They did it in the past and did well. Yahoo has been a top search engine for a long time. They are not going any where. It is hard to move a 300 lb Gorilla. You got to remember that people don't care much about the search engine as long as they find stuff. I still have people tell me that Google is a better search engine because it has better results. They probably read that in an article or someone told them. That can't be true Yahoo and Google are the same. I think this is because it looks cleaner and not cluttered so it must have better results. SE's do well by winning the perception war not the better search engine war. The masses pick things for very simple reasons. When I go to the store and buy tomato paste they pretty much all cost the same and taste the same. Why do I pick one over the other? Often times in marketing the first person on the scene does better than the second because they were first. Clorox could try to sell Clorox brand cola in the US and no one would ever buy it. If they did the same thing in China it might do well because nobody ever heard of the brand Clorox before and certanitly never linked it to bleach. Yahoo has a large base of users that will use it till the end of time unless they just start giving out useless results. They could probably have 20% of their top 10,000 search phrases be useless and not lose much business. Point is they can and will get away with whatever they want. Looksmart is dead because MSN threw them out not because they sucked.

[HayMeadows]

I'd like to think that Looksmart is dead (and stays dead), because they screwed Webmasters. Hopefully Yahoo and everyone else learned a lesson from Looksmart's insanity.

[Chndru]

SE's do well by winning the perception war not the better search engine war.

Excellent point ogletree.

[ogletree]

Looksmart only had one way of every lasting as a company and that was being bought up by MSN. That had to be there only business plan. If they had any other they were idiots. It was either be bought out by MSN or die.

[rise2it]

....Hopefully Yahoo and everyone else learned a lesson from Looksmart's insanity... .

Uh..yeah - that's why webmasters paid tons of money to be listed in the Yahoo directory, which is now virtually useless. (and don't start justifying the Yahoo submission cost with that Google pagerank crap....I don't think a link from a Yahoo PR4 page with 1800 outgoing links helps much.)

They took our money for the directory, then threw the directory away, so they could take our money with Overture.

Now they need more money, so they'll do away with 'free' Google listings and start charging for those as well.

And next year they'll want more money, and change schemes again.

IT'S all about money.

It's ALL about money.

It's all ABOUT money.

It's all about MONEY.

...any way you say it.

[nicebloke]

Yes.

There was a survey which they sent around a few months back giving various different PPC pricing models to gauge the reaction. I think it's entirely possible at some stage.

[kanetrain]

If it happens, Yahoo will be the first to pull the trigger on it. And they'll release it in beta so they can say that they were the first to have it (in all it's glory with lots of bugs etc). Look at the "product search". It's an absolute disaster and they are promoting it on the front page.

[Compworld]

Actually, the product search has lead to sales for our site in the past. Since it went public up until last Friday, we were doing pretty well. Although, this weekend was the first weekend that fell after three straight weeks of direct sales from the product search. It is an expensive way to advertise though. Its by far the most expensive CPC marketing we use.

- CompWorld

[mcavic]

Its by far the most expensive CPC marketing we use.

True, it's rather expensive. But theoretically, shouldn't the conversion be very high?

[powerstar]

They are going to use Inktomi and Inktomi is alreay PFI/PPC anyway so what's the different?

[Compworld]

Not necessarily. Dealtime, PriceGrabber, and Nextag have high CPC, and their conversions are next to garbage. So, it’s really a toss up. In regard to the Inktomi PFI, they will not index all your items. Only what is already in the database. So, the only way to get into Yahoo Shopping is really a CPC. We only spend a set amount per week. Which is actually used up in two or three days. So, yea I guess we might do better if we ran it seven days per week, but if we did, we would have to cut out Overture or Google spending. So, right now, that is what we are doing. We have like 100,00 different items in different categories, so the prices are a little high in some of them, but they actually had converted better back in the past then Google or Overture. Why? Well it maybe because it’s targeted to shoppers, or maybe because it's Yahoo. But that's why it’s better for ecommerce sites. Their support though isn't that great yet.

- CompWorld

[kanetrain]

My conversion rates on Yahoo SHopping (I've been in for 2 years with my Yahoo Store) have traditionally been horrible! Their PPC IMHO are just ridiculous given the coversion ratio when compared with Google Adwords or Overture.

I'd like to see them drop most categories to .10. THen we might consider getting back in. For now, we'll keep pushing all our $ at Google. It produces and it converts.

[HughMungus]

kanetrain, is this "rumor" related to your problems and delisting from Inktomi?

[kanetrain]

No, actually we are back in Inktomi. We were miraculously reincluded several weeks ago with no explanation. Apparently, so were many others as well. Positiontech tweaked something, resubbmited us and got it working. Not sure how, but were are back at the top for all of our important keywords.

This "rumor" is based on a conversation with a Yahoo employee and the fact Yahoo purchased Inktomi and Overture and already has the capability to implement this on a wide-spread scale. Also, Yahoo held focus groups on this very issue a while back (I was not part of these focus groups, I've just seen rumblings around the web). Apparently, Yahoo asked for feedback on a search engine model with PFI/PPC showing up in the SERP's together with free results. Apparently, everybody in the focus groups hated the idea, but that doesn't mean that Yahoo won't do it.

I think it would be horrible.

[kanetrain]

BTW, positiontech confirmed that it was indeed an Inktomi glitch and not anything that my site had done. Comforting on one hand (to know that we didn't actually do something wrong), kind of scary on the other (to think that we could be completely dropped -- without doing anything wrong).

[rfgdxm1]

>Reason to believe that Yahoo is going to a PFI/PPC model for entire engine

I can't believe nobody posted this yet why this is unlikely. The vast majority of searches people do are non-commercial. Thus, few would want to use such an engine. What might make sense is doing like the old MSN + Looksmart. PPC above regular SERPs. However, if this was such a good model, why did MSN boot LS?

[kanetrain]

First - MSN droped Looksmart because MSN Knows that traffic is power. Looksmart without MSN is nothing and MSN without Looksmart is just fine. Both companies made a considerable amount of $ off of the LookSmart model. MSN, Looksmart, and Yahoo could all argue that the business model is a successful one as long as you have both the technology and the traffic.

Second - I am ready to make my prediction. First this was just speculation, now it's a solid prediction. In the coming months, Yahoo will introduce a PFI/PPC model using the Yahoo directory. You will pay to get into the Yahoo directory (the price will probably be lowered to get in but not by much) and then you will pay for every click you receive. Do a search for any highly competitive search term on Yahoo.com. You'll notice that the results that are returned are google results but with Yahoo Directory listings. Now right click and copy the link to the website and check the urls of those listings... it doesn't go straight to the site (like most search engines including google). The url takes you through a Yahoo engine first (tracking click-throughs etc.). So instead of going straight to www.yourdomain.com it goes to http://drs.yahoo.com/b;ahblahblahblahblah/v=2/TID=F197_5/SID=w/l=WS1/R=1/SS=41219310/H=0/*-http://www.yoursitehere/

What does this mean? Yahoo can trace the clicks that every site in the directory receives. It didn't used to be this way. This is a fairly recent development. All of the framework is in place. It's only a matter of time before Yahoo starts asking for PPC rates on directory listings and mixing paid results with non-paid results on the SERPS.

Sure, I could be totally wrong, but when it happens, remember this thread.

[edited by: encyclo at 10:09 am (utc) on Sep. 7, 2007]

[Philosopher]

Actually, Yahoo has been using these tracking URLs for a VERY long time. Prior to the switch to Google results, they used the data from click-thru's received in their ranking algorithm.

[kanetrain]

Really? I could've sworn, when Yahoo switched to google results they showed pure google results for some time. Then after a while they started showing google results with the directory listings.

I could certainly be wrong.

[worker]

If Yahoo were to charge for every click, their directory would be decimated. The majority of sites listed would not be able to support a per click model. Just browse through any subsection and you will see what I mean.
A PPC model only works for certain types of sites, and the Yahoo directory would be irreparably harmed by a shift in that direction. I hope you are wrong, because I like Yahoo.

[kanetrain]

I hope I'm wrong too :)