The key rationale for the the Google-Yahoo search deal (debated today on Capitol Hill) is that Yahoo will come out of it with better ad rates for keywords. Search marketing firm SearchIgnite crunched the data and came up with an estimate: search ad rates on Yahoo will go up 22% when Google starts selling them.
Yahoo actually has higher keyword ad rates than Google for some types of search advertising, such as the first three results on searches for premium keywords, such as “insurance.” Yahoo also does better than Google on the top results for keywords that contain the name of a brand, which marketers pay a premium for.
But Google gets higher ad rates for long-tail searches and more specialised searches, as well as for keywords that come up lower in search results of all types. In coming up with its 22% estimate, SearchIgnite assumes that Yahoo will continue to sell the terms it does well, while outsourcing to Google the terms it doesn’t monetise.
For its part, Yahoo estimates the search deal will net $250-450 million in incremental cash flow in the first year.
Here’s how keyword ad rates compare Yahoo vs Google, according to SearchIgnite, which buys $350 million in search advertising per year:
Long-Tail search terms:
Keywords containing a known brands:
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