According to Heather Lloyd-Martin, MSN’s upcoming entrant into the Google-Yahoo! paid placement battle is more similar to Google’s approach than that of Yahoo!
Since MSN has already dropped use of Yahoo!’s organic search technology, observers have been waiting for the other shoe to drop—when will MSN Search launch its own paid placement service?
We don’t know the answer to that one yet, although it seems that mid-2006 is the latest that Yahoo!’s former Overture service will be dropped. Obviously, this is bad news for Yahoo!, because MSN Search still controls over 10% of the search market, so Yahoo! is losing a significant chunk of market share for its paid placement offering. Because Ask Jeeves and AOL Search both use Google’s AdWords paid placement offering, Yahoo! has no significant paid search partners, quite a turnaround from how Overture started its business when it partnered with everyone (it seemed) but Google.
But Heather made news with a comment by Matt Lydon of MSN Search in a panel discussion, where it was revealed that MSN will use an approach closer to Google’s than Yahoo!’s for search ranking. Yahoo! uses the tried and true “highest bid takes the top spot” approach, whereas Google uses the combination of bid and clickthrough rate to pick the winner. This has been very successful for Google for a number of reasons:
- While Yahoo!’s approach maxiizes bids, Google’s approach maximizes Google’s revenue.
- The use of clickthrough rate somewhat increases the relevance of paid placement ads.
- Clickthrough rate also reduces the need for editorial oversight, because poor ads will die a quick death from going unclicked, whereas Yahoo! must weed out high bidders with poor response.
So, if Google’s approach has been so successful, why hasn’t it been copied? Search insiders have long discussed Google’s patent on the ranking algorithm as the impediment, but apparently MSN Search believes they can go Google one better. Matt Lydon, as quoted by Heather, says that MSN’s algorithm will use bid, clickthrough rate, and audience. Evidently, MSN believes that this approach not only evades Google’s patent but also provides better results by introducing a demographic element that would appeal to traditional advertisers and provide more targeted results.
Time will tell if this is a better mousetrap, but search marketers should think about what kinds of demographics they’s like to pay for as MSN’s offering gets closer to launch.
