Feb 242009

Yahoo Rich Ads in Search: Paying A Premium for Brand?

Yahoo RAIS for Esurance

Last week, Yahoo publicly announced their new Rich Ads in Search (RAIS) program. Since at least the middle of last year, Yahoo has been testing a feature that would allow advertisers to add videos, custom search boxes or images to their traditional text search ads. According to the Yahoo Search Marketing Blog, the small group of advertisers who tested this last quarter "saw click-through rates rise by as much as 25 percent" along with "improved brand exposure and conversion rates".

On the surface, the concept piqued my interest. But as I learned more, the program seems more aligned with Yahoo's bottom line, than with those of their advertisers.

Initially, it appeared that the program might present opportunity to test and capture higher click-thru by using images to leverage brand awareness that has been generated by offline efforts. Unfortunately for now (the program is still in very limited Beta), Yahoo RAIS has limited the images, custom boxes and videos to "select" brand keywords. It's not available for incremental paid search terms where there's lots of competition for the traffic.

Search for "Staples" on Yahoo

As we've pointed out in the past, there's a distinct difference between traffic on your brand terms and traffic on your incremental (non-brand) search terms. If I search for a brand like "Staples" or "Staples Office Supply", I've likely heard about Staples from another source, before doing the search.

Fortunately for Staples, (and many retailers) the results pages for these brand searches are already dominated by Staples natural and paid search links. Clicking on just about anything on the page will get me to the Staples site. In these cases, the incremental value to the advertiser seems extremely limited by RAIS options. Perhaps most helpful for those in the midst of re-branding or logo change (Tropicana, anyone?).

I'd be curious to see how the CTR increase was measured by Yahoo for their test. Did the presence of an image increase the overall CTR of the SERP (meaning the total clicks on natural AND paid links INCREASED) or did the image in paid search simply attract attention and effectively move clicks away from the natural listing?

Anecdotally, we'd expect that having a presence on both paid and organic links for non-brand searches may help boost the overall SERP CTR for your ads, but I don't believe the same would hold true for branded clicks when the brand links are as omnipresent as Staples.

Even if I was in doubt about the incremental benefits of RAIS, it's probably worth testing, right? After all, brand clicks are typically cheap. Not so in this case.

Yahoo's been very quiet about the pricing for the program, but it doesn't appear to be charged on a cost-per-click basis - at least as it exists in Beta. Rumor has it there's a monthly fee to participate in the program that runs well into the five-digits!

If Yahoo would really like RAIS to work on a more broad scale, there are two changes they could make to create a more attractive program for advertisers:

    Yahoo Search for "Office Supplies"1. Make the program available for any keyword, or at least any keyword above a particular traffic threshold. I'd love to test the incremental value in Staples placing their logo next to their ad for "office supplies", when the page is filled with competitive results. It should help to set their ad apart as searchers may recognize the logo from offline branding efforts.

    2. Charge the advertiser a fair rate that they can tie back to ROI. Perhaps a distinct premium-per-click that they can opt in to, based on participation in the program. Whether it's an additional $.30 or 30%, the advertiser could then calculate their final CPC and understand the added value that RAIS is driving.

Ultimately, Yahoo's bottom line will be best served by creating products that better align with advertisers' goals.


4 Responses to "Yahoo Rich Ads in Search: Paying A Premium for Brand? "
Bryan says:
Ryan, I generally agree with your analysis that there's likely little incremental traffic benefit from RAIS when you look at the big picture of paid & natural search. Some supporting data: We made some internal changes recently that caused an off-on-off-on sequence with our Google sitelinks and saw approximately 25% decreases in branded paid search CTR when sitelinks were enabled. All-inclusive branded search traffic (paid + natural), however, was not impacted. As you suggest, if Yahoo had looked at TOTAL traffic, they would likely be seeing the same thing... However I see two instances in which these ads could prove beneficial to advertisers: 1) Advertisers that face stiff competition on their own branded keywords from other retailers and/or affiliates. For example, with a 1st position RAIS buy, Nike or Danskin could force competitive search ads to the right rail, thus allowing increases in CTR that would actually equate to incremental traffic. Gains in margin from selling your own product from your own site directly - rather than through retailers - potentially could easily offset the ad buy. 2) Advertisers wanting to repurpose TV media. Even a 5 digit cost could be easily justified with thousands of additional monthly views of a 30 second TV spot... assuming advertisers know the incremental value of viewing their ads. If RAIS were opened up to all advertisers on all keywords, don't you feel that larger, more recognizable brands would benefit substantially more than small/new/niche brands? I'd personally be much more likely to click a Staples logo for "office supplies" than an "acme office supplies" logo. Albeit maybe the fact there are already display urls to the same effect negates this line of thinking.
Bryan, you make excellent points! Branding always makes more sense for manufactures than for resellers of commodities. I'm not convinced of your second point though. Seems like if someone is searching for your website you don't want them to first watch a commercial before letting them in your store. The website has to be the best advertisement of all, and people can actually buy things there! Google has experimented with longer text ads in the past, and I think they're finding that the more "sponsored links" look like ads and the less like "natural links" the less people click on them. I could be wrong, but I'm betting we'll not see significant in-roads of rich media ads in competitive search. George


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