Price check: Google/Yahoo deal means 22 percent increase

    July 17, 2008
    WebProNews Staff

Keyword bids will become more expensive with Google’s search advertising deal with Yahoo, one search management firm contended.

In a whitepaper published by SearchIgnite, the company made an explosive determination. Keyword prices on Yahoo could vault an average of 22 percent, if “Yahoo pursues a profit maximization strategy.”

Costs will vary, said SearchIgnite, depending on whether these keywords are uncommonly searched ‘tail terms’, commonly searched ‘head terms’, and ‘brand terms’:

Tail terms, defined as words or phrases that are very specific and do not see high search frequency, are priced at a premium per click on Google for all positions, with an almost 20% gap by position #3 and 35% gap after position #5.

Head terms, defined as commonly searched keywords, are priced at a premium per click on Yahoo! on average for the first three positions. After position #3, head term advertising on Google becomes more expensive on average. Bidding on these keywords is generally more expensive due to their large volume of searches and high competition among advertisers.

For brand terms, Yahoo already charges more per click for the first position in a list than Google does, but the two are roughly the same in pricing the second and third positions.

SearchIgnite said since Yahoo already declared they can pick the placement and location of Google’s ads on Yahoo Search, Yahoo should make more money opting for Google advertisers.

That contention adds more fuel to the argument where the Yahoo and Google deal gives Google a virtual monopoly on search advertising. We expect Microsoft to scream bloody murder about this to Congress, the DoJ, and anyone else who will listen.