Although it was only formally announced last week, Yahoo! rolled out their new Quality-Based Pricing model in late May. This week and next, SMTrends will take a closer look at some of the specifics related to the new pricing structure in a two-part series by Michelle Kelly from the Atlanta office of Avenue A | Razorfish.

The Quality-Based Pricing model primarily applies to advertisers using Yahoo!’s contextual network (“Content Match”), and it works by charging tiered pricing based on the value of their distribution partners’ websites. It is important to note that this is a phased launch beginning with a select number of keyword marketplaces, and then expanding more broadly across their network over the coming months. Yahoo! is also working on additional enhancements that will further help to increase the quality and value of traffic. For example, the domain-level ad-blocking capability is currently slated to roll out later this year.

As mentioned in issue #47, also highly relevant is Yahoo!’s recent steps to fight Click Fraud. Quality-based pricing is a key step in Yahoo!’s ongoing efforts to increase relevancy and quality within their search advertising marketplace. This enhancement will help ensure that traffic from Yahoo!’s network is priced in a way that is consistent with the quality it delivers. By providing higher ROI and discounted bid amounts, this change should provide for lower spending and allow advertisers the flexibility to experiment with their Yahoo!, and other, search marketing campaigns.

These changes are solely being made to improve advertiser results. Sites within the Yahoo! network will have a “Quality” score based on aggregate publisher conversion metrics, traffic source and implementation type. Other measurements may also tie into the final equation. There is nothing that an advertiser using Content Match needs to do to claim a discount, which will be applied automatically. Yahoo! recommends: “…keep in mind that the amount of the discounts may vary between advertisers. Some may experience a noticeable decrease in overall cost-per-click; while others may experience only a small decrease in spend.” Next week, this series will conclude with a closer look at possible advertiser concerns.

Search Insider Summit – In Florida last month, Lindsay Rinehart presented a case study about Avenue A | Razorfish client Chase Bank during the Search Insider Summit. The case study was also presented to Yahoo! Search marketing and helped AA|RF win the 2007 Yahoo! Search Light Award.

Chase had traditionally run search campaigns against a Cost Per Approved Application (CPAA) for their credit card business. Some highly relevant terms such as “credit cards” that are core to their business seemed to become out of reach due to inflated costs (competition) when based solely against the direct response goal; however, these terms were important to have in the campaign due to relevance and volume. Chase teamed up with Yahoo! to conduct a Branding Study, to understand how Branding plays a role in the SEM environment, and if these core terms should be measured against a Branding metric.

This study was conducted Pre-Panama, so Chase targeted top positions (1-2) for the Test Group. The Control Group kept the campaign totally offline – no ads were shown. A sample of consumers who did not click on the ad in the Test group, and those not exposed to the ad in the Control group, were then served a survey somewhere through the Yahoo! Network of sites that asked about their perception, favorability and awareness of Chase vs. its competitors.

Results: Among those exposed, Chase was the most recalled bank among its competitors with 62% ad recall. Perceptions of the brand were significantly elevated among those exposed to the Brand, and there was a 44% lift in unaided consideration of applying to Chase. Overall: The value of just being exposed and prominently placed in search engine results had a very positive impact on Branding. AA|RF is continuing its research with other clients to monitor the Branding impact across various verticals, and is continuing to explore opportunities for studies with Comscore or similar partners.

SMX Advanced - At last week's inaugural SMX conference in Seattle, Matt Greitzer spoke on a panel titled "Beyond the Majors." Matt highlighted the Avenue A | Razorfish experience with 2nd tier search engines, citing an overall spend of around 5% of overall search dollars on 2nd tier engines and vertical search. Matt explained that the time versus return ratio on these engines was often unfavorable to overall campaign performance, and that 2nd tier engines would need to make their interfaces easier to use if they expected greater adoption.

Matt also related that many search managers and clients have had poor success with 2nd tier engines, and are reluctant to give them a second chance. In fact, search managers have been weary of 2nd tier Paid Search providers for years. But a recent AA|RF case study demonstrated that 2nd tiers can be efficient if managed correctly. Matt cited success with engines such as Enhance and Miva, as well as good results with vertical search engines such as business.com. For blog coverage of the SMX conference, visit Promediacorp and Search Engine Roundtable.

Searchnomics Coming to Santa Clara June 27 –WebGuild will be hosting their one-day conference, “Searchnomics,” at the Santa Clara Convention Center on June 27. Among other speakers, SMTrends editor Chris Boggs will be moderating a panel as well as presenting during a separate SEO-related session. More information is available at the WebGuild site.

Google Attacked on Privacy – In a recent report issued by a U.K.-based privacy watchdog group, Google was rated the least concerned with Privacy.  From the report summary: “…a six-month investigation into the privacy practices of key Internet based companies. The ranking lists the best and the worst performers both in Web 1.0 and Web 2.0 across the full spectrum of search, email, e-commerce and social networking sites.”  The attack against Google is clearly defended: “We are aware that the decision to place Google at the bottom of the ranking is likely to be controversial, but throughout our research we have found numerous deficiencies and hostilities in Google's approach to privacy that go well beyond those of other organizations.”  The SEM community’s mostly lambasting reaction is available at Search Engine Land and even directly from Google’s Matt Cutts, among other blogs.