JenSense had a great post (as usual) about Yahoo pulling its YPN ads out of MySpace:
MySpace has long been a marketing tool and a great way to drive traffic to other sites or advertising. But if you happen to be monetizing with MySpace and using Yahoo Publisher Network, you may get your account suspended, even if you have non-MySpace sites on your account as well.
Apparently YPN is shutting down the publisher accounts that are placing ads on MySpace.
So what’s really going on here? Why is YPN giving up on so many potential page views that it probably badly wants? Their termination email to the publishers mentions the reason being "poor traffic quality", but the real reason is probably more like poor targeting combined with too much traffic. Here’s the real story[1]:
While contextual advertising (such as Google’s AdSense and Yahoo’s YPN) is an amazing way to monetize content pages, there are fairly big pockets of content that are terrible for contextual matching. The main examples that come to mind are:
- Finance pages – A reader of a financial site reading an article about Cisco is not really interested in buying a Cisco router.
- Dating sites and social networks – The content of a dating page or social network page (about me, my favorite pet, hobbies, etc) has little or no connection to what the user is looking for while on those pages.
- Home pages – Notorious for being difficult for contextual algorithms because they usually contain lots of very dynamic bits of data on a wide variety of topics.
But that hasn’t stopped Yahoo (nor Google) from placing ads on any of these pages in the past, so why is MySpace different?
Yahoo’s dirty little secret is that when the pages don’t contextualize well, Yahoo ignores relevancy and simply picks ads with high bids such as mortgage ads, credit card ads, etc. So even though click-through-rates on these pages are fairly low, Yahoo makes up for it because the bids on these categories are high (usually in the $2-5 range per click).
Of course the advertisers on those categories never intended to appear on pages that aren’t relevant for, well, credit cards, mortgages, etc. They’re bidding $5 to appear on a SERP or content page related to what they’re selling. They’re expecting a qualified lead for their buck. So how can Yahoo pull this trick without pissing off its advertisers?
The secret is all in the proportion that Yahoo (or Google) can maintain between their highly targeted search placements and those irrelevant placements described above above. As long as the mortgage advertiser is seeing a big % of the traffic coming from Yahoo’s search, the non-relevant clicks get diluted in the mix and fly under the radar.
But as soon as this proportion is disrupted by adding the massive MySpace exposure, those bad clicks stopped flying under the advertisers’ radars. I bet Yahoo got very angry calls from advertisers surprised to see they were being placed on pages they never intended to be on and that have no relevance to the keywords they were bidding on.
In ways, this reminds me of the old scheme for robbing a bank by shaving the rounding errors of each transaction. This works great as long as you keep shaving fractions of a penny from each transaction, but scales pretty poorly if you start taking dollars from each transaction.
The quality of traffic on MySpace is not inherently bad. The trouble is not ‘poor quality traffic’ as Yahoo is trying to claim, but rather intentional goofy ad targeting that simply doesn’t scale very well…
[UPDATE] As I mention in the footnote below, this post is based purely on educated speculation. Yahoo posted some more clarifications on this issue on their YPN Blog, so go there for the real ‘real story’.
[1] Well, scientifically speaking this is more speculation than ‘the real story’, but being that I work for Quigo (<–that was an embedded disclosure…), I think I have a fairly good insight into the dynamics of this story. Speaking of which, I think we did a fairly good job at solving the problems described in this post. But that’s for another post maybe.