Under Deal With Google, Ads on Yahoo Could Cost 22 Percent More

July 15, 2008,  12:20 am

Under Deal With Google, Ads on Yahoo Could Cost 22 Percent More

By SAUL HANSELL

It’s not a surprise that search advertisers are wary of Yahoo’s deal to have some of its search ads sold by Google. After all, that extra money that Yahoo is hoping to get from the arrangement is coming from somewhere: the pocketbooks of advertisers.

One measure of what sort of effect this will have was published Tuesday morning by SearchIgnite, a company that sells software companies use to manage their search advertising. Its conclusion is that overall, the cost to advertisers of a click from Yahoo’s site will go up by 22 percent if Google sells the ads.

Assuming Microsoft and Carl Icahn can’t derail Yahoo’s plan, its deal with Google is undergoing scrutiny in Washington. It is the subject of a Justice Department inquiry and will also be the topic of a Senate hearing Tuesday.

To compare the actual price its clients paid on Google and Yahoo, SearchIgnite looked at 12 million paid clicks for 15,000 different keywords. It only compared clicks that were for the same position among ads on a Web page: the cost of being listed first on both, for instance, or the cost of being in the third spot.

Interestingly, the price difference varied substantially depending on the sort of word. For the most popular search terms, Yahoo actually was more expensive for advertisers who wanted to be in the first three results. But Google cost more for ads in position four and beyond. Yahoo also costs more for the very first position in searches for brand names.

But where Google costs the most is the vast long tail of less common search terms, the study found. For those terms, even the top spot cost 14 percent more on Google and by the fifth through 10^th spot cost 54 percent more. Google, which accounts for more than 70 percent of the search advertising spending measured by SearchIgnite, simply has more advertisers bidding on more terms.

Roger Barnette, President of SearchIgnite, said his firm doesn’t isn’t taking a position how Congress or the Justice Department should react to Yahoo’s deal with Google. But the firm and its clients are concerned about the consolidation of search advertising...

Opinion: Google's role in journalism

What if we left journalism to journalists and the technology to Google?

Jeff Jarvis contemplates such a partnership, sparked by a recent discussion with Edward Roussel, head of digital for the Telegraph.

Jarvis paraphrases Rouseel's argument, saying, "Google already is the key distributor online... Google is great at technology and newspapers aren't and for the future, where are the best technologists going to go? Google. Google is also brilliant at selling ads and Edward even wondered where the best sales talent would go in the future: there or a paper? So why not hand over those segments of the business to Google and concentrate on what a newspaper should do: journalism?"