YPN Falling Short of Adsense

Many–if not most–bloggers receive most of their advertising revenue from Google Adsense. The reason is simple: despite the program’s annoying tendencies towards secrecy (Smart Pricing), Adsense pays out far better than alternatives (usually). But there was one slight problem–we were all dependant on one entity for monetization. Umm, *eek!*

Which is why so many of us jumped for joy when Yahoo! finally announced YPN, their Adsense alternative. The program has been in BETA for a while, and I’ve tested it out on my own blogs. I’ve got to say, YPN is nowhere near to rivalling Adsense, and I’ll tell you why in one word:

Depth.

Adsense has it. YPN doesn’t.

Admittedly, many bloggers have noticed that the two programs pay out about the same. The YPN CTR is usually significantly less than Adsense (because it doesn’t target as well–due to less advertiser depth) but it pays more per click than Adsense (because it lacks ‘Smart Pricing’).

Now, Smart Pricing annoys me as much as the next guy, but in reality, it’s the only thing that makes contextual advertising sustainable. Ads on blogs are just not going to convert as well as ads displayed on Google.com search results pages. It’s that simple. When Google implemented Smart Pricing, it knew that EPC would fall across the board, but over time it would make that money back and then some by making it feasible for many more advertisers to enter the marketplace.

Their logic in “mathematical” form:

discounted clicks = more advertisers = more ads and keywords = better contextual targeting = higher CTR = higher long term revenue

My guess is that the advertisers participating in the YPN are not getting a good ROI on their current campaigns. And long term, this will prevent the system from having the depth it needs to be a success for both publishers and advertisers.

Aside from this depth issue, Google already has the first mover advantage. When you want to buy a used *something*, do you go to eBay, or Yahoo! Auctions? I’m guessing eBay. Why? Selection. They have a much larger critical mass of users. In an efficient global multi-marketplace environment, there tends to be one marketplace that’s larger than the rest, and further, this seems to be self-sustaining. Where do the buyers go? Where the sellers are. Where do the sellers go? Where the buyers are.

Don’t get me wrong: I am still bullish that YPN can make a good alternative to Adsense. But Yahoo has to address some of these issues or it will be doomed to be an also-ran… in that case, thank God for Chitika! ;-)

Comments

  1. schlomob says:

    I have the unusual opportunity of seeing this from both sides.

    My day job is web marketing for a highly commodotized industry and we’re currently running campaigns on both G and Y, as well as traditional web ad buys with a few major networks. On my personal time I have a daily blog that is currently being serviced by G. I’m not pulling major numbers but it’s enough to buy a really nice dinner a couple times a year.

    At work we are putting together our Q2 analysis. Although there are a few weeks left in the Quarter we have determined the acquisition cost for each customer with the formula extended cost/conversion – we take the CPC and multiply it by the clickthru count, that gives us our total spend. That number is divided by the actual clicks that convert to sales.

    We were somewhat surprised by the results. Google generated far more traffic and total sales. However, the Acquisiton Cost per sale was $34.69. Yahoo’s cost per sale was $23.34. Of course, that differential could be attributed to click fraud but I think that Yahoo would be just as challenged in that regard

    We are still trying to figure out a best strategy but there is definitely a difference between the two from the advertiser standpoint.

    From a personal perspective I am getting very ticked with G. I think their ‘my way or the highway’ stance is unacceptable and not content creator, or advertiser, friendly. Without content creators they would have nothing to index. Without advertisers they have no revenue.

    I question their practices and accounting, but there is no way to call them to task unless you’re a major advertiser. The G Analytics tool doesn’t match the reporting by G Adwords. Neither of them match my server logs.

    I am probably not alone in my growing frustration. Sooner or later, either G will face some serious competition or there will be an exodus of dissatisfied advertisers and content affiliates.

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