I had a meeting at Yahoo this week. The meeting was targeted at companies heavy into affiliate programs. We heard from a number of program managers, but because I am under NDA, can’t disclose all the great stuff they are working on. However, I will say these guys are not sitting around worrying about Microsoft. They are firmly focused on the future and presented an impressive list of products and upgrades. Most  interesting was some of the stuff going on with PPC management and while I can’t be specific, I think I can say that managing PPC on Yahoo is about to get a lot easier.

I know Yahoo isn’t the shinning star of the industry they once were, but these guys get a lot of stuff right. Google has the search traffic and therefore the money and therefore the clout, but judging by Microsoft’s track record, they don’t have the stuff to make Yahoo better.

Don’t get me wrong, I am not a Microsoft ‘hater.’ In fact I was a liaison to Microsoft when I was at Intergraph and spent a fair amount of time on the Redmond campus, they get a lot right. Tons of R&D and top people, but their leadership in office applications doesn’t currently translate to search or internet services.

So did Yahoo make the right decision? If I were a shareholder, I would probably wouldn’t think so. As a Internet marketing guy, I am glad to they didn’t merge this into Microsoft’s AdCenter mess. Yahoo had a business before the MS deal and it still does.

Yahoo has great people, product, and heart.

I am always surprised when I find businesses measuring Ad effectiveness based on click-thru rate. CTR is a simple measurement of clicks given as a percentage of impressions. That is, for a given volume of ad impressions, some number of readers have clicked-thru to your site. Unfortunately CTR can be very misleading. If you create a gee-wiz ad (such as click here to WIN), you can make your CTR soar, but if 100% of those clicks bounce, or otherwise don’t go past your landing page, you have wasted your money. What is needed is some kind of conversion or success metric to indicate that a positive step has been taken beyond just clicking the ad.

Conversion tracking is offered within Google’s, Microsoft’s and Yahoo’s the Ad interface. To track conversions, a code snip-it is placed on a confirmation page and information, like total purchase amount, can be captured. For a eCommerce site this provides straightforward business case as it is easy to understand that paying $1.00 for a click that result in a sale that nets $2.00 is a good investment.

If you don’t sell on-line, you can measure demo requests, requests for information, or file downloads as conversions. For service businesses, if the prospect selects your Contact page, where your street address, phone number, or email link are displayed you have established a clear ‘buying signal’.

I highly recommend turning on conversion tracking and installing the conversion code for every search engine you work with. Once this is enabled, you will have an additional column in your ad account showing ‘conversions’. Use conversions to help you tune the wording in your ads and to see which keyword phrases are producing the best results. One note, if you rely on a Contact page as a success metric, be sure to remove address, phone number, email contact, etc. from other pages on your site or your conversion rates will be skewed low.

There is also a conversion measure is also available in Google Analytics called Goals. Google Analytics Goals lets you identify a single page visit as a goal or visits to a series of pages can trigger a Goal. Setting ‘Goals’ helps you identify your most fertile source of leads and tune your advertising budget accordingly.

Previously I has said that you shouldn’t use broad match in AdSense campaigns. While I still lean in that direction, it would be more correct to encourage you to test both phrase and broad match and then base your decision on hard conversions data.

An excellent article on this topic: Google AdWords Marketing: Exact Match Bidding

How these differ:

Broad Match:

Broad Match actually matches the words from the phrase any order. What is a little harder to follow is broad also matches synonyms for your phrase. If you have the phrase “tennis shoes” in your campaign, you ad may be triggered by a search for “tennis sneakers”. So the complete phrase has to be there, but Google may accept a synonym for part or all of your phrase. So if your phrase is “tennis shoes” won’t get matched for “tennis elbows” or “running shoes”.

Here is the link to Google’s help on this topic: What are keyword matching options and What is broad match?

Phrase Match:

Exact Match:

Exact matches only when all the words are used in the exact order, but with no other words in the query.

Yahoo Marketing

Yahoo adds some confusion in that it uses the terms “standard and “advanced”. “Standard” is similar to Google’s “exact”, but introduces some minor variations to your phrase, including plurals and misspellings. “Advanced” is analogous to Google’s “broad”.

See: Overview: Match Types

So what should you use, broad or phrase??

I think the best answer is “it depends” and some testing will be needed to ferret out the differences. I have tried both with a number of clients and usually find that “phrase” performs better than “broad”. I say usually because there are other factors that affect the results.

You might come to the conclusion that “broad” was better because your ad will be triggered on a wider range of phrases. After all, your ad should accurately identify what you are selling and keep your clicks relevant. However, Google and Yahoo both use click-thru rate as part of there formula to determine what to charge. So, if “broad match” causes your ad to be presented for searches that are irrelevant to your ads, your click-thru rate will be lower and you CPC rate will go up. More relevant matches will drive more clicks, improve your click-thru rate and drive down the CPC.

See: Quality Score

So again I come back to the importance of using “cost per conversion” (also known at cost per acquisition, CPA), as your metric instead of “cost per click” (CPC). As long as you have a way to measure cost per conversion you have a reasonable handle on the value of the phrase and can make an educated choice about what match perform best at the least cost.

Added 3/10/2008 >> Another good article on this topic: Focus On Exact Match