The big news all over search land is the just-inked deal between Microsoft and Yahoo to combine search delivery and ad-selling forces in order to combat Google.

The deal makes sense for all parties.  Yahoo gets better search technology by powering their web search properties with the Bing algorithms, and Microsoft taps into a network that is many multiples larger than its own.

From our point of view this is mostly good news.  Better, more relevant search results will make the Yahoo/MSN ad network that much more valuable, and hopefully provide a better qualified audience, especially in markets like high tech, where the valuable portion of the audience has tended to use Google.  More volume in the network also means we can perform faster performance assessment and testing, and more rapid optimization.

The only worrisome note is the talk of centralizing ad sales on the Microsoft AdCenter platform.  AdCenter has always been much more difficult to manage than AdWords, or Yahoo’s Panama platform, however API-driven tools may largely make these differences moot for agencies (aside from their development teams). Should AdCenter be the ad management platform of choice, expect to see small and local advertisers alienated by any migration away from the Panama platform.  We would strongly suggest that Yahoo/Microsoft integrate Panama as the ad management platform of choice for the combined network.

With an estimated 24 months of integration to execute this almost-a-merger, we don’t see any rapid changes in daily management, but the road ahead will be interesting as Yahoo and Microsoft address the thorny details implicit in this deal.

I have received so many links to Tuesday’s New York Times article on click fraud “Per-Per-Click Web Advertisers Fight Costly Fraud” from people that my inbox is full.

Pay-per-click advertising is on the rise.  As reported in the article, this is the only form of advertising that grew during the economic debacle that was 2008.  The attraction of this highly measurable form of advertising is more keen now than it ever has been, as companies shift their marketing dollars to the most accountable form of advertising.

It’s no surprise that the lure of those dollars attract the nefarious, with 17% of all clicks in 2008 deemed fraudulent per Click Forensics, according to the article.  The search engines are trying to keep up. They continue to improve their click fraud algorithms and do catch a fair amount of it.  It’s not a perfect science, however, and while they do offer credits for fraudulent traffic, it is still incumbent upon the advertiser to defend themselves.

While click fraud is a serious problem, it is rarely reported on accurately. Click Forensics and other panelists at the Search Engine Strategies conference in NYC last year reported that much of the click fraud that Google and Yahoo experience is in their content network. Reporters are typically blind to the difference between the content and search networks and don’t distinguish between the two. Click fraud is also a pet topic for reporters since it sounds exciting.

As an agency, we have been monitoring click fraud for our clients since the day we opened our doors in 2003.  That’s possible because we track the performance of every keyword and monitor every click.  The data we receive are analyzed every day for patterns and activity that constitute fraud and we use those data to champion our clients with the engines.  We have had countless thousands of dollars returned to clients.

Is click fraud a problem? Absolutely. Is it going away? No. And so we constantly keep vigil and protect our clients.

(If you do not track your own PPC campaigns, then let me urge you to do so ASAP and to analyze the data you obtain.  There is an outstanding standalone tracking service called ConversionRuler that you should check out.)

Don’t recognize that Yahoo Pay-Per-Click ad as your own?  You may have Yahoo’s Automatic Account Optimization program to thank for that.

Recent changes to Yahoo’s terms and conditions (sent via email to advertisers) allow Yahoo to create ads, edit keywords, and/or optimize accounts on behalf of its U.S. advertisers not bound by an Insertion Order.

In a blog post last week, Yahoo justified its opt-out program, which has caused a firestorm among advertisers and agencies.  Citing the success of its program, as measured by increased numbers of ads in accounts and high acceptance rate of its proposed changes, Yahoo reasserted that the program “is intended to help raise the performance of accounts that are experiencing issues like low-quality quality scores, low lead volume or low click-through rates.”

As anyone involved in performance-based search engine marketing knows, these metrics are important, but no metric is as important as the profit generated as a result of the changes.  Increased click-through rate does not equate to increased ROI or net profit.  Changes that focus on the wrong metrics are sure to drive up advertising costs without an eye towards profits.

Not to mention the fact that this program can interfere with ongoing landing page, ad copy, keyword and other testing in which an advertiser may be engaged. Stories of the types of changes that have been made to optimized accounts, including introduction of a promotion code that expires, leave those of us in the industry concerned for advertisers who do not have ample time to monitor their accounts for optimization changes that may be detrimental to their business, ultimately.

Advertisers should be aware of these changes and should use hard statistics to determine whether they have a positive result.  Agencies should be aware that they may not necessarily be opted out and consult with their agency reps.

Yahoo has improved their geo-targeting capabilities with a new release to their management console allowing country-based geo-targeting.  We look forward to auditing the results of our geo-targeted campaigns to assess how accurate it is.

This is very good news and will allow us to more accurately geo-target campaigns, which always means more efficient management.

The Christmas gifts from the engines have arrived and we thank them for including us. Every year the engines send out holiday gifts to their advertisers who meet a certain threshold. (What that threshold is, I have no idea, but this is what you get for millions in annual spend.)

This year Yahoo sent a laptop case and a very thin rubber keyboard that can be rolled up and easily taken anywhere. This is texttyped ith the purple rubbr keyboard, as youcansee it is notvery easyto type. It is a great idea, though.

The other gift from Yahoo was a very nice laptop case, seen here in a picture from CPA-Affiliates. Our President was particularly amused to see his name emblazoned on the zipper. He chooses to believe Yahoo personalized it just for him.

Google’s gifts this year were a 2GB credit card sized USB memory stick, and a donation to a local school of our choice. They don’t mention the amount of the donation, but I think it is a very nice gesture and a unique way of supporting the local communities of their advertisers.

It is nice to be acknowledged and we are always grateful for what we receive. Happiest of Holidays!

The Yahoo Search Marketing Blog recently published another article on keyword insertion, one of my least favorite PPC strategies.

The reason I am down on keyword insertion is that it is a fundamentally lazy way of improving campaign performance. It was designed so that novice PPC managers could get better clickthrough rates without a lot of effort. The theory being that seeing the keywords emboldened in the ads will attract the attention of the searcher and thereby improve clickthrough rates.

So first, the disclaimer. If you have a campaign with large ad groups full of diverse search terms, it is possible, or even likely, that keyword insertion will improve your conversion rate. However, there is a limit to how much this can help.

The problem with keyword insertion is twofold. First, it can often result in fairly odd ads, for example:

What does this mean? Are they supporting charm sales or bicycle sales? Bicycle charm sales? If so, they don’t seem to be attempting to qualify a target audience and the ad copy doesn’t really work for any of these potential audience segments.

Second, it is tempting to create very large and diverse ad groups or avoid dealing with the issues that these types of ad groups can cause. The problem is that large and diverse ad groups don’t perform as well as small and cohesive ad groups in building quality score and in identifying diverging behavior in audience segments.

To use Yahoo’s example, they suggest combining the keywords “chardonnay” and “wine” to use in the same ad. However, if we create a user profile for these terms where the user attributes are:

“wine” - low wine education, searching for gift, cost-conscious

“chardonnay” - oenophile, searching for self, quality-driven, bulk-buyer

We can easily see that if we limit optimization to what works for both these audience segments, we may easily miss massive opportunity for increased clickthrough and conversion rates.

Keyword insertion can work, particularly where the ad groups are conceptually tight and the resulting ad text isn’t nonsensical, however, we would not consider it a good best practice in most situations.