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Overture And Yahoo: Are They In Cahoots?
By Neal Lebar
Expert Author
Article Date: 2003-04-08
Hi Neal:
My name is Scott Newman from US Markerboard. Last year we began our adventure down the road of pay-per-click advertising. It has been a very high learning curve. Before that we were sourcing out our SEO to CoastalSites, a company that uses WebPosition Gold for it's clients (which we continue to do).
Our initial start on the web was in 1997 so we have had a bit more experience than some of my competitors and the early start gave us some "grandfathering" in some of the engines.
Our pay-per-click advertising drove our sales up over 193% last year, but at a cost. All-in-all it has been a successful way to advertising.
Here is why I am writing you.
What is the relationship between Overture and Yahoo? Over the last year, I am finding more and more "store.yahoo.com" advertisers taking up the higher slots in the sponsored advertising section.
It has been my understanding that if you sign up with Yahoo Store, you pay them a percentage of the sale, a fee per sale and a monthly fee. In return they pay for the advertising.
If this is true, then the customer is paying Yahoo, Yahoo is paying Overture, and Overture is paying Yahoo for the listing.
Therefore, Yahoo is not paying the same click rate that I am. Do you know anything to the contrary?
Your reply would be greatly appreciated.
Sincerely,
Scott Newman
US Markerboard
Hi Scott:
The PPC from Overture places the 2-4 listings on Yahoo. I just recently noticed that Yahoo has taken over the #1 position -- I just wrote to my rep yesterday asking if I can purchase the #1 position. Besides the 1 - 4 listings, I have no idea how Yahoo ranks the listings below that. Since the top 4 positions account for a very large % of the clicks - I heard as much as 90%, then I pretty much ignore the ones below. I use SEO but relegate it to be used only after all other PPC and defined positioning are taken advantage of. There are so many deals out there that guarantee the top position - I just haven't found SEO to be effective. I'm not wild about smoke and mirrors - here today, gone tomorrow -- I don't believe it's an effective method to build a real business. I know it can work but I just don't think it's up there with PPC and other marketing options. Until I've exhausted the other options, I stay away from SEO.
It's easy to check out your theory... just go to Overture and view the bids -- you'll see who's paying and how much. I haven't seen a Yahoo store being paid for by Yahoo, on the Overture site. I think this is done independently - although I'd like to know if I'm wrong.
By the way -- AltaVista also sells the #1 position and they've just come out with a new product called an RSU that appears on the bottom of the page with a logo.
Neal:
Thanks for getting back with me. I am completely in agreement with the ineffectiveness of SEO. However, for the $250.00 it is short money to get other listings in comparison to PPC.
Like most companies that play the PPC game, you are doing it because it is the only real way to consistently reach your target audience. Like you said, with SEO, here today gone tomorrow.
However, the Yahoo/Overture thing is really bugging me. If it is legit, and my other competitors are just using the store.yahoo.com for name branding they're foolish. I called Yahoo on this and spoke with an Account Exec who said that the companies pay Overture directly.
Try the keyword phrase "dry erase boards" on Overture or Yahoo and you'll see what I mean.
Why would anyone want to pay $3.00 for a click to Overture, a percentage of sale to Yahoo, a fee for the lead to Yahoo, and a monthly fee to Yahoo? By the time you finish with credit card charges etc. you're losing money on each sale but making it up in volume.
Anyway, I don't believe it. Maybe I'm a bit paranoid, but I believe that Yahoo and Overture are sleeping together.
Following up on your note about AltaVista, please provide more info on buying the #1 slot and RSU. Any info would be appreciated.
Scott:
I hear you with Overture & Yahoo. I just couldn't imagine Yahoo paying those kind of dollars. I also can't believe they could conspire without it getting out. If they did, I would expect the user to be sent to their store home page. I believe these companies are actually spending that kind of money. I agree with you and can't figure out how they justify those kind of per click costs - it's outrageous. I've seen the same thing in the diabetes supply business and have seen bids increase to $12 per click!!! It was a competitive thing to be right at the top and they kept out bidding each other (Overture loves that). After about a month of it, they all went away and the cost dropped down to less than $1. It's hard to figure some of these people - they just don't seen to understand. Or maybe, we're the ones who don't understand and they know something we don't.
All the more reason to get a whole bunch of keywords and try the "other" PPC providers. Very few people have found these or put any money into them. Give them a try; I've had great success at a minimal price.
About the Author:
Neal Lebar has been building and managing Internet campaigns since 1996. He has proven that Internet marketing absolutely works and can generate returns far greater than traditional media. Visit - www.innovate-inc.com, www.extenderware.com or nlebar@innovate-inc.com.
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