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:
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!