We noticed a spike in Yahoo impressions, traffic and costs without any corresponding lift in sales generated, so we took a look under the hood.
Like Google has done before it, Yahoo is taking its definition of "advanced matching" to a whole new level! We did some digging in our search logs to see what people were searching before clicking on one of our client's ads. We saw lots of unrelated traffic coming in on our ads. The brand ads are riddled with far-off non-brand queries, non-brand traffic on completely unrelated searches are being served ads from our clients -- a real mess.
To give some background, Yahoo offers two match type options: standard and advanced match. Yahoo's advanced match is similar to Google's broad match in that it allows an ad to be served for 'related' search queries. (The question is how the algorithm deems a search as 'related'/'relevant'.) There is no 'exact' match option, like on Google and MSN. Yahoo uses canonical roots, and drops 'duplicate' (keywords normalize to the same root) phrases if loaded at the same time, in the same adgroup. (ie 'mitten' and 'mittens' would probably be considered duplicates, so one version would be dropped.) If there are cannonical 'duplicates' in the account, Yahoo will serve one of these ads for a given search, even if the other ads (not served) matches the search query exactly!
Standard match doesn't seem to be the problem. From what I gather, standard match ads are served with relevant, very similar searches, sometimes with slight difference - like plurals, singulars, misspellings, reversal of word order, etc. This is what is supposed to happen with Standard match, so no problem. Ads on advanced match seem to be the real pain point, with lots of unrelated traffic funneling through.
The trouble with poor traffic coming in on these ads is it drives down the sales/click for these keywords. As such, to maintain efficiency, our bidding system decreases bids. This lowers the ad's position on the page, and decreases sales volume.
Adding negatives associations to avoid obvious poor traffic helps, but when they serve our "flower bouquet" ad on a user search for "chocolate" it's tough to control.
Hopefully, Yahoo will tighten its matching algorithm. In doing so, it'll benefit advertisers by cutting poor traffic and unproductive spending. Right now, Y! gets additional clicks and revenue with the funny matching. In the long-run Yahoo may be punished from casting the net too wide, as users will become trained to not rely on Yahoo's Sponsored Listing results.
We passed along some of the search log findings and Yahoo's engineers are looking at it. We'll let you know what, if anything, they have to say.