Why Google Adwords May Yield a Better ROI Than Yahoo Sponsored SearchIn the pay-per-click world there are two 800 pound gorillas, Google and Yahoo. Most online merchants advertise with both of these companies. Which of these gorillas deserves more money? The answer is quite simply the one that yields the greatest return on investment. This article focuses exclusively on search results (not content site ads) and makes the case that Google Adwords has a greater likelihood of yielding a higher return on investment.
Google Adwords offers more flexibility than Yahoo Sponsored Search in terms of which sites a merchant's ads are displayed on. With Google Adwords, merchants can opt to have their ads displayed only if someone executes a query on the Google domain whereas Yahoo Sponsored Search has many network partners and does not offer merchants the ability to specify which sites an ad runs on. It is all or none.
Evaluating a random day's activity of an unnamed company, Yahoo Sponsored Search yielded referers from many domains including:
www.phpxp.com
www.mpofree.com
www.giantexplorer.com
www.xlisitings.net
www.alltheindustrials.com
It's possible that some readers of the Nexternal Nexus have heard of the companies listed above. However, most probably have not. What is also disconcerting is that 15 of the 55 clicks received for the day from Yahoo Sponsored Search had no referers. This unnamed company would love to get traffic only from Yahoo.com. Why? Clicks from Yahoo.com have proven to convert. Unfortunately on this given day, the company paid for 55 clicks and only 9 came from either the Yahoo.com or MSN.com domains. At an average click price of $3.08, the company paid $169 for the day. However, based on the 9 clicks that the company really wanted from the major domains, the company is really paying $18.81 per click (6 times more than it would have appeared had they not tracked referers).
Why does Yahoo allow so many network partners sites to display their results? Simple, they make more money. Until enough advertisers reject Yahoo Sponsored Search for this reason, they have no incentive to offer specific site placement.
This brings another point to the table; who are these web surfers that are searching these obscure sites? That is tough to say. Certainly there is incentive for the site owners themselves to generate clicks since they are participating in a revenue share. On the given day above, 6 times more people visited the unnamed company's site from Yahoo's partners than from Yahoo itself. Does that seem realistic? Yahoo is a huge brand name with enormous traffic and a Google Page Rank of 9. Most of the partner sites have unknown brands with low Page Ranks. Even when aggregated, traffic from Yahoo.com should dwarf that of its partners.
Google enables advertisers at the Campaign level to specify traffic sources. They too have third party network partners that display search results. However, merchants have the option to specify their ad placements on Google search only. Why does Google give merchants this flexibility? Maybe it has something to do with Google's mantra, "Don’t be evil."
Let's assume that the unnamed company's Google Adwords campaign is set to only display ads on the Google.com domain and that the cost per click is about the same. $3 spent per click on Google Adwords sure beats the $18 spent for clicks from the other domains. The unnamed company would need to have 6 times the conversion rate from Yahoo Sponsored search just to equal the Google Adwords campaign. That is significant and simply not plausible. On this given day, when the investment is 6 times greater on Yahoo Sponsored search for referers that convert, the ROI question is easily answered.
Regardless of which pay-per-click channels your company uses, track your referers from those sources. Just as important, track which of those referers are converting. You might be surprised to learn what clicks you are paying for.
