Why is Google so far ahead of Yahoo in sponsored search (they've got about 70% of the market)? This Wired News article looks into the tortured history of sponsored search at Yahoo, and it's not a pretty story. (Interesting reading, though.)
What's frustrating for advertisers, of course, is that their search engine gets a lot of traffic, and their sponsored search programs do get good results. The system is an gigantic pain in the neck to use (even after the transition to their new platform), but it does produce results.
It's just that Google has done everything right, including their approach of constant small upgrades to to their platform - something Yahoo didn't have the luxury of doing:
And this project was more complicated than just knitting together a search engine with Yahoo's computer systems. It needed, among other things, a new easy-to-use interface for advertisers to navigate while placing their auction bids. While Google's AdWords service allowed customers to buy ads through a fully automated system, Overture's did not. Nor did Overture have an effective way to push advertising onto blogs with matching subject matter, as Google did.
Another problem was Overture's practice of displaying ads based solely on how much the advertiser had offered to pay per click. Unlike Google's system, Overture's wasn't designed to factor in how much traffic those ads might generate. This meant it was more likely that expensive but irrelevant ads could end up at the top of the column marked "sponsor results." This sounds easy to fix, but it actually entails creating entirely new ranking software and a new database to keep track of millions of clicks on the fly.
And lastly, because Panama was going to handle billions of dollars of customer money, it needed to have billing and cash-management systems as reliable as a bank's. By the end of 2006, Yahoo had already spent three months transitioning advertisers to the new network, something that is to continue into March. "It's been like changing engines in an airplane midair without any of the passengers noticing," says Steve Mitgang, a senior VP at Yahoo.
Pretty much. I'm not up to speed on the interface of the new platform now, but my impression so far is, "this is it?" Just trying to find simple bits of information about your account is pretty laborious. And then you go over to AdWords and it's just all so easy.
The problem for Yahoo is that if an incremental increase in spending at Google will produce the same results as the same money spent on Yahoo, why even deal with Yahoo? Until an advertiser who's looking for lead generation has truly tapped out Google's potential (and I don't think that happens often), Yahoo is a tough sell.
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