The New Face of Advertising – Economics of the Web!
Yahoo vs. Google’s ad pricing models.
Google prices the adds based on revenue that the add is expected to generate – this is called action based pricing or transactional based model. Yahoo, on the other hand, prices the ads based on the highest bid for each slot location on the sponsored-link banner. Consequently Google has been reporting ad revenue of approximately 40% higher than Yahoo’s, experts say. Yahoo announced early last week that they will move to the Google’s model of ad pricing which is expected to boost Yahoo’s future ad revenue. Well … shortly after this announcement, Yahoo’s made an announcement delaying the usage of this new model for three months causing their stock to drop 22%!
Yahoo researchers are not sure how will they users react to this and are worried that their existing advertisers will go to Google. They are re-thinking what to do. I guess it will take some more studies and analysis to figure out Yahoo’s next steps.
Google prices the adds based on revenue that the add is expected to generate – this is called action based pricing or transactional based model. Yahoo, on the other hand, prices the ads based on the highest bid for each slot location on the sponsored-link banner. Consequently Google has been reporting ad revenue of approximately 40% higher than Yahoo’s, experts say. Yahoo announced early last week that they will move to the Google’s model of ad pricing which is expected to boost Yahoo’s future ad revenue. Well … shortly after this announcement, Yahoo’s made an announcement delaying the usage of this new model for three months causing their stock to drop 22%!
Yahoo researchers are not sure how will they users react to this and are worried that their existing advertisers will go to Google. They are re-thinking what to do. I guess it will take some more studies and analysis to figure out Yahoo’s next steps.
posted by Deima Elnatour at
3:04 PM
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