Nov 172010

Bing-Hoo: Off to a Rocky Start

The first couple of weeks of full-bore Bing-Hoo are in the bag and the results...are VERY interesting!

Teasing out the winners from the losers is challenging. There are several different angles to consider: did Yahoo or Bing benefit more? Did Yahoo's syndication partners win or lose in this? Is the combination of Bing and Yahoo going to hurt Google?

First, here's a look at the transition time schedule as one of our clients experienced it:

Bing certainly picked up many new advertisers which should have a two-fold positive effect on their revenue: first, there should be a greater number of relevant ads to chose from for any given search, improving the CTR on ads in general; and second, it creates a tighter bunching in the bid landscape decreasing the gaps between what advertisers bid and what they actually pay.

Position bidders may find more folks willing to bid against them for bragging rights. All of that should result in higher RPM, revenue per thousand impressions.

But the countervailing problem is the reduction in traffic quality and the inability to segment created by merging the Yahoo and Bing traffic. As we anticipated, the data suggests that bidding to the mean value of traffic (keyword by keyword, ad by ad of course) results in splitting the difference between average cpcs on Bing and Yahoo for the combined entity. This creates inefficiencies which should lead to reduced ad spend and sales in aggregate.

The data seem to bear this out.

Looking first at the relative market-share of Bing and Yahoo combined vs the total including Google (just looking at paid search, not content) shows a pretty significant drop exactly when the traffic shift occurred.

Let's take this apart to isolate the causes.

Question 1: Has Google done something to gain share during this period or have they been in essentially steady state?

Answer: No, for this basket of accounts, aggregate spend on Google actually trended down a bit during this period. This relative gain in market-share for Google is coming with no particular benefit to Google, it's simply lost revenue for Bing-Hoo.

Question 2: Is RKG dropping the ball?

Answer: No, efficiency targets have been maintained in aggregate for this basket of clients. We did a good job of anticipating the drop in traffic quality and adjusted bids accordingly.

Question 3: Are other advertisers and agencies dropping the ball?

Answer: Yes, to some degree the data suggests that others have not adjusted to the new economic realities. In a rational marketplace with efficiency driven advertising we would see all bids dropping to reflect the change in traffic value, and we'd end up in the same position on the page relatively to others. We don't see that happening, yet.

Question 4: Is irrational bidding by others the whole story? In other words, as others who budget search by engine watch their ROI decline and eventually pull back bids, will Bing-Hoo regain all the lost share?

Answer: No, while CTR and click volume have dropped some as a result of lower positioning on the page, the real driver in the retail space is the decline in traffic value and CPCs.

While Bing-Hoo's clicks as a percentage of the total paid search clicks have dipped from ~21% to below 20%, it is the relative decline in what rational advertisers can afford to pay for those clicks that has truly dropped off the table.

Question 5: Is the traffic quality differential driven more by conversion rate differences that could conceivably relate to ad relevancy, or demographics which would be much harder for Bing-Hoo to fix?

Answer: Conversion rates are certainly one component, but the Average Order Value is almost as important in the retail sector, which can really only be a function of demographics.

The wackiness at the end of the graph is a bit troubling to me, and highlights an important caveat to the entire post. I studied a subset of our retail clients, so a limited sample totaling about $1M per week in spend in one sector of the paid search space. Moreover, I studied aggregate values rather than medians meaning big changes from our largest clients have a disproportionate impact on the numbers, and I suspect that explains a piece of the wackiness at the end. Doing this right would involve account to account and even keyword by keyword comparisons that I just don't have time to do.

That said, we find that these hacked together studies generally show results that are in keeping with the more carefully crafted follow ups.


If we accept that this data is at least directionally valid, we anticipate that account to account Bing-Hoo will generate less revenue for the engines (and fewer sales) than they had generated separately. This decline may be entirely wiped out by the increase in the number of advertisers paying in, and as we know advertisers don't all behave rationally, which may mean that budgets don't change and efficiency simply suffers at the end of the day.

We shall see.

I'd love to hear what others are seeing, particularly in the lead generation space.


20 Responses to "Bing-Hoo: Off to a Rocky Start"
G-Money says:
If other advertisers are anything like us, the drop in share of paid spend while Google stayed constant is due to us holding our budgets back while the inept teams at Yahoo and Bing figure out how to merge the accounts properly.
LOL! I feel your pain! I'm pretty sure we crossed that hurdle by and large, but our Director of Client Service earned a Medal of Honor in the process.
James says:
I think my spend across the two networks has declined by about 10% since the transition. I feel that this was caused by the change in match types, although I did have change my search distribution to "only Bing and Yahoo websites" to replicate my Yahoo settings. Did Bing have syndication partners prior to the Yahoo merger? I can say that from an ROI perspective, the first couple weeks after the transition were bad, really bad, even when compared with last year's ROI. Things are rebounding in a nice way though now. Did they bing/yahoo some bugs? Did people start spending? I don't know... Even after the holidays, it will be hard to compare 2009 with 2010 ROI, because, I feel, that this year, Holiday shopper's average order size is going to be much larger due to the recovering economy.
billy wolt says:
very poor results for one of my clients. Spend went up, sales went down. yahoo was never really good to him, so I expected this to happen when my client was transitioned over. There seem to be lots of garbage affiliate sites that came over from yahoo. We have responded by pausing all advertising until things get undercontrol. For now, it's not worth the time and effort to get back to it's old levels.
James, thanks for your feedback. I hope you're right about AOVs, the retail sector has been through a lot over the past 2 or 3 years.
Thanks for the insight, Billy. It's worth it to turn off the Yahoo syndication partners which you can do at the ad group level in Bing. If you want to go all out, you can add duplicate campaigns that are only syndication and bid them much lower. You can extract some value from the syndication partners...but not a lot.
I have two accounts (lead generation) running on Bing-Hoo. One account is doing real good, while the other went down by at least 50%. There are lots of pending ad copies of which I still don't know the reasons behind. Good suggestion on duplicating campaign George. That's the best way to go to minimize spend on the syndication partners whom IMHO needs a lot of cleaning up by Bing-Hoo. Yahoo's syndication partners before the alliance was a great pain.
Thanks for your input, Jun! Late correction: Mia Brennan, rock star Senior Analyst at RKG, both corrected my earlier comment -- syndication controls in Bing live at the Ad Group level, not the Campaign level -- AND deserves credit for contributing the very cool transition graph at the top of the page. All hail Mia!
Hi George, Our results looked horrible a few days into the transition. Turns out that all of our excluded sites from Yahoo didn't quite make it to the Bing account. We did as you described above, turnning off the sydication partners at the adgroup level in Bing. Our Yahoo account rep is movign the excluded sites now, but I'm not sure it will even be worth turning on the syndication partners. Almost 1/3 of our spend was being wasted on over 7000 syndication partners (really bad). Great post/discussion as always! Chad
Good to hear, Chad. Yeah, Yahoo's syndication network really got out of hand and it cost them big time, I think.
Brad says:
George, Great analysis as always. This is very similar to what we're seeing. Overall, the new microsoft content network (via Yahoo) just isn't great. I talked extensively with some adCenter people about their handling of the huge influx of new traffic and they thought their discounter system would be able to handle it and even out CPCs based upon quality like Google does. I think its so much data that it will take a while for the system to really understand how the discounter should work and for them to tweak it. Hopefully, they are working on it right now; but until then, I almost feel its the old world of AdWords where advice #1 is to turn off content until you get a handle on it and the network improves.
Thanks for your comment, Brad and doing us the honor of reading our humble blog! We've found that for our client base of mid-sized to large mostly retail accounts, the syndication "smart pricing" doesn't work at all on either Google or Yahoo. The discounts aren't nearly enough, and moreover the quality of the traffic from any given syndication partner varies wildly by advertiser. eBay traffic works reasonably well for some of our clients, horribly for others, so a "one-size-fits-all" discount just doesn't cut it. I'm not sure whether our folks have done much with the content networks of Bing-hoo yet; frankly, I'm far enough from the front lines now that I'm not sure we actually ever got those to work at any level worth the effort. Let's grab a beer sometime!
Jc says:
"...quality of the traffic from any given syndication partner varies wildly by advertiser." This is true, which is why advertisers should be taking all the impression volume they can get. Don't be too quick to change distributions to only the search sites. Instead, get site referral data to find which sites need to blocked and do it manually. As advertisers, sometimes we have to pay for the volume first before it can be optimized.
This is a great point, JC. People who are too gun shy to test end up missing out on many opportunities. We've always been proponents of launching most new campaigns on broad match following the same principle: you have to learn what's out there before you can react sensibly.
Very interesting to see the difference in the graphs. It is good to see that you are keeping a close eye on it.
CS says:
It would be great to see an update to this analysis. Ultimately the combined marketplace should be more competitive. Do you see this happening?


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