Timberline Interactive

Say goodbye to 10-cent minimums on Yahoo. The company has started tweaking the minimum bid requirements for its Yahoo Search Marketing text ads, so they will now be calculated based on market demand and ad quality scores.

Mediapost's Tameka Key quoted a Yahoo spokesperson as saying the move was designed to "More to more closely align keyword bids with the value and relevance associated with those keywords."

On SearchEngineLand, Barry Schwartz offered some screen shots of the new alerts you'll see for any key terms affected by the change. He also provided a number of guidelines for keeping your click costs low and your ROI high.

As with past minimum-bid increases, few high-volume positions will be affected by the change, as market forces have already pushed the effective key terms well above the 10-cent floor.

Yahoo -- in the crosshairs of a takeover bid by Microsoft that Steve Ballmer says may soon go hostile -- is reaching out to arch rival Google.

Yahoo will provide some of its advertising space to Google AdWords ads, in a two-week experiment that is seen as testing the waters for a broader partnership. Of course it may just be posturing by Yahoo, which has countered that Microsoft's offer is too low, and has been scrambling for weeks to find white knights to save it from either 1) being gobbled up by Microsoft in a hostile bid, or 2) being made increasingly marginal in the search and search-advertising game.

Meanwhile, Google has no interest in a Yahoo-Microsoft marriage. On its blog, Google (which knows a little something about competition) whined that such a deal would be anticompetitive.

The partnership will display Google ads in response to about 3 percent of Yahoo searches made in the U.S.

Cuddling up to Google may help Yahoo fend off a takeover bid, but to search marketers like Timberline Interactive, the attractive thing would be more exposure with less work. Why manage ad campaigns in both Google and Yahoo if Yahoo would simply roll over and syndicate our Google ads across its whole platform?

In the short run, that would certainly make things more convenient for online marketers. But talk about anticompetitive! In the long run, it's best for marketers when a few robust ad platforms are competing for their business. Search-engine ads and other online advertising products will be more fairly priced, and offer better management tools and targeting options, when there are more strong players in the game, not fewer.

Chris Middings, web editor at Seventh Generation, tipped us off to an interesting new study from EngineReady. A two year research product capturing data from 27 ecommerce websites, the report is titled "SEO vs. PPC -- The Final Round." The basic methodology was tracking the dollars of business transacted by each of four traffic sources, and averaging that value on a per-visitor basis. As the report's title suggests, the project aims to resolve the question of whether paid-search visitors are "worth" more or less than visitors entering a site from free, "organic" search.

The study doesn't really succeed in answering that question, in my opinion. But first, here are the dollar values per visitor segment reported by Engine Ready:

• Direct Access (visitors who typed the URL or used a bookmark): $5.69
• Other Referring Sites: $5.01
• Paid Search: $1.91
• Organic Search: $1.35

Obviously, visitors typing your specific URL or choosing a bookmark from their browser favorites are your most qualified customers of all -- people already familiar with your brand, perhaps they are repeat buyers. Or their interest in your URL has been driven by some offline advertising, such as your direct-mail catalog, television or radio ads. That they represent the highest value-per-visitor is no surprise, and we see the same results among Timberline clients.

EngineReady doesn't explain why "Other Referring Sites" rank so valuably, merely offering that it shows the importance of "link building" above and beyond its SEO benefit. But I think the study's authors largely missed the point here: For many ecommerce merchants, "referring sites" are dominated by two sources:

• Affiliates (assuming they have an affiliate program)
• Recipients of your email newsletter who use web-based email clients like Gmail, Hotmail, etc.

Neither of these are "link building" for SEO purposes. Both will be made up largely of qualified visitors -- people responding to your loyalty email program, or (since so much affiliate traffic is driven by brand-name searches) people stumbling through an affiliate site on their way to find your site. If that's the case, it's no wonder "Referring Sites" yield a value not far off from Direct Entry.

Another omission, to anyone who has done a lot of online marketing, is the failure to segregate brand and non-brand terms in the Paid and Organic buckets. We all know that your brand name performs worlds differently than generic terms. The latter bring you new customers and incremental business, but usually at a conversion rate below your existing customers.

Inspired by EngineReady's research, I took a cross section of Timberline clients and ran the math, but I went the extra yard and segregated the SEO traffic by brand and non-brand terms. Here are my results:

Why do Timberline clients differ from EngineReady's numbers? I believe it's because:

• Many have strong brand names within the niches they occupy
• Relatively few have robust affiliate programs
• Many have significant non-commercial content like recipe, articles, blogs and community features
• We do a good job managing paid search programs to high ROI :)

All in all, though, EngineReady's research is compelling, and makes good food for thought. check it out at http://engineready.com/company/trafficstudy.html

A new survey finds that 75% marketers expect -- and plan to live with -- continued click-price increases in their paid search advertising programs. But after years of steady increases in click costs, over half of respondents say they are nearing a spending ceiling.

Some 65% of the marketers surveyed reported that their CPC click costs had grown last year, with most reporting click-price inflation in the range of 10% to 30%.

A small group -- about 5% of merchants -- reported their CPC prices had inflated three-fold or even more!

The "2007 state of the Market"survey was conducted by SEMPO (Search Engine Marketers Professional Organization) and Radar Research.

Read more on eMarketer: http://www.emarketer.com/Article.aspx?id=1006162&src=article1_newsltr

I'm heading on the road next week to my first Internet conference in a while, the DMA's Catalog on the Road in Cambridge, MA. The reason for my absence on the conference tour has much to do with a 2-year old child. Unfortunately, playing virtual mom is more difficult than playing virtual marketing.

The idea of virtual marketing got me thinking - which online marketing specialties are best suited for marketing tools and which are best served with personal, hands-on effort? I was forwarded an email about a piece of software that can make pretty pictures of Google Adwords accounts, theoretically enabling you to better understand and thus react to the data. Does this really help or does it add a layer of complexity? I don't know the answer. The pictures were nice, but I'm not sure they would make the information easier to understand. Do we need another tool, or do we need to just dig into the data and make good marketing decisions? I tend to lean towards less bells and whistles and instead prefer to rely on marketing instincts and skilled decision making, but I am sure that there are some tools out there that would make my job easier and possibly even help deliver increased ROI to customers. I'll keep my eyes open for those tools while on the road!