Quality wins out over price in paid search

New Media Age

02/08/2007

Yahoo! last week introduced its new ranking model, commonly known as Marketplace Design, for paid listings within its search platform (NMA 26.07.07). The launch signified that the transition to its new paid-search platform, Panama, was almost complete. Yahoo! is the last of the three main search engines to move to a relevance-based ad-ranking model.

This is the culmination of one of the biggest projects the company has undertaken, and one that systematically changes almost every aspect of its search marketing business.

"It was a very big day for us as it's the first time that we, in all the guises we've had, have changed the way that we order our paid listings," Richard Firminger, Yahoo! Search Marketing regional sales director for Northern Europe, told NMA. "Because it's moving away from a price-based model to one that looks at quality first, it enhances the value of our marketplace."

Democratising paid search

This is the principle of Yahoo!'s Marketplace Design, Google's Quality Score and Ad Rank and Microsoft's quality-based ranking: to enhance the value of the marketplace. Their goal is to provide users with the best and most relevant ads in relation to their search, as well as make the ranking model as democratic as possible.

The latter is important, as before any of these models were implemented paid-search listings were very much about survival of the richest. "Companies that had a lot of money could simply outbid the rest, which made it hard for companies on a smaller budget," says Grant MacFarlane, head of search at Media Contacts.

Ed Stevenson, MD of 24/7 Real Media, says this led to some companies exploiting the system and placing ads in areas away from their usual sectors, simply to keep at the front of consumers' minds. "With the old Overture system - where the more you paid, the more you could be sure of getting to the top - you could bid on terms that might not necessarily be directly associated with your brand," he says. "So introducing a quality and relevance ranking process is certainly good from that point of view."

Firminger says that in the end the old model was unproductive for advertisers as users kept seeing the same ads. "Moving to the new model improves everything in the world of search marketing," he says. "Looking at quality first absolutely ensures that the consumer is more likely to get what they want, which is what we want. At the same time, it makes the advertisers think about how they can be better at what they do."

This time last year, however, when Google added landing-page quality to its ad-ranking model, many advertisers, especially those within the affiliate world, were negatively affected. Almost overnight, brands saw their ads slip down the rankings.

"Google's Quality Score takes into account click-through rate, relevance of the keyword and creative, and then 'other factors', which is where the secrecy is," says Stevenson. "No SEM or advertiser really knows what these other factors are, especially as they change from time to time."

"Keeping it relatively secret is important, but it does affect advertisers' budgets and therefore the ROI of the medium," he adds. "It still doesn't get away from the fact that Google has this black box factor in which it can change the rules at any time, which has far-reaching effects.

"If Google's motivation is purely to make advertising relevant, why won't it tell us exactly what those rules are so we can obey them?"

Neil McCarthy, client development director of search agency Tamar, says he's seen little change since Google introduced landing-page quality. "Money and click-through rates are far and away the most important factors," he says. "How much you're bidding and your popularity still come top in search. Landing page is factored in, but it's really those two that count."

He adds, though, that this has been enough to enable many advertisers to optimise their site as a whole. "If you build the landing page appropriately for Google, then it roughly applies the same rules that apply to SEO optimisation," he says. "If you adhere to these rules, it sets a good standard."

A dent in Google's dominance

What effect does a quality-based ranking model have on the long-term prospects of a search engine? Providing advertisers with more democratic listings and users with better results is one thing, but will it actually generate more traffic, given that Google is such a runaway leader in the search field?

"It makes our business more effective, which has an effect through the network," says Yahoo!'s Firminger.

But McCarthy isn't as enthusiastic. "Google has such a dominant market share that it really doesn't make that much difference," he says. "What Yahoo! and Microsoft are doing helps, but the difficulty is that they're each sitting there with under 10% of market share; it still comes down to the fact that it's Google's show."

How do quality rankings work?

In their official explanations of how ads are ranked, it's unsurprising that Yahoo!, Google and Microsoft say a lot without actually revealing very much. The majority of SEMs' work is second-guessing exactly what the search engines want out of them.

Yahoo!, for example, says that ad quality is decided by its 'historical performance'. So its click-through rate (CTR) is judged against that of its competitors and its 'expected performance', which Yahoo! says is judged on 'various relevance factors considered by Yahoo! Search Marketing's ranking algorithms'.

Google, on the other hand, says that there are two stages to how an ad is ranked. The first is Quality Score, which determines the minimum cost per click (CPC) for an ad to appear on AdWords. The second is Ad Rank, which takes the Quality Score into consideration when placing the ad within sponsored links. Quality Score is made up from the CTR of the keyword and the relevance of the ad copy, keyword and landing page. This then feeds into the Ad Rank, determining the ad's position, but in this instance doesn't include landing-page quality as a factor, only the relevance of the keyword and ad copy.

Microsoft, which introduced its quality-based ranking model in April, is the most expansive of the three in its explanations of how it looks at landing pages. It assesses the ad's content and the landing page in relation to the user's likely intent, as well as linking the relevance of the keyword to the landing page. It also says it tries to 'ensure that there's substantive content on the landing page to fulfil the user's query', but also looks for duplicated content.