Yahoo placed 102,742 ads against Google search results during April and spent, on average, $90,965 per day doing it.
Why? It’s search advertising arbitrage.
The average ad Yahoo buys on Google appears 15th from the top, often on the second page of results. That means Yahoo isn’t paying very much per click. The idea is that a Google user will click on the Yahoo ad, and then, once they reach the Yahoo Shopping search results, click on a higher-placed, pricier ad.
It’s a strange practice, but common enough. Pretty much most of the top 100 Google advertisers do it.
Update: A commenter sheds some light on the practice:
As someone who used to do this at Yahoo in the UK, I can tell you that the desired Margin is 30%. On average that is achieved easily, however take out brand terms (its amazing how many type “Yahoo” into Google” and its nearer 10%. Its more of a market share thing for the shopping channel.
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