Maybe Panama Doesn't Rock For Clients?

Following up on my breathless musically-lyrical treatment of early results from Yahoo's Panama launch, this story in Mediapost (free registration required) suggests that clients may not be as thrilled about early performance as are paid search providers.

Avenue A reports that, across their 33 clients, click-through rate is definitely up, by +10%, but conversions are down an average of -5%. The story contradicts itself on cost-per-click, claiming it dropped early in the story but then referring to a CPC rise in the next paragraph.

CPA, the third most important individual metric to clients (after margin and then revenue), is up +6%.

This might mean something -- or it might not. A key question I have here is about the integrity of the study. Testing best practices state that you hold all ancillary variables in control while you test one or just a few key variables at a time, with everything else running exactly the same on a simultaneous basis (in this case, same bids, same keywords, same keyword rotation, same offer, same copy, same copy rotation, same site split within the content distribution network, etc.) If you can't manage that, then you need to apply some sophisticated regression analysis to tease out the noise in order to bring everything onto the same playing field.

In this case, the thing that exacerbates the analysis even more is that they are comparing on a before-and-after basis, in which changing competitive conditions over time can also create a challenge in determining the validity of the results.

I'm not saying that Avenue A hasn't applied all the statistical filters required to the study in order to eliminate the noise, and their conclusions may be totally valid on an objective basis. But that's the question that I as a second-hand observer have.

FOLLOW UP: I just ran across this story on BizReport, which confirms my earlier post regarding Yahoo's happiness about performance, and also cites the Mediapost story above. But this is interesting -- the BizReport story notes Avenue A's clients seeing a click increase and CPC decrease -- BUT no mention on CPA increase and conversion drops! I guess including that sort of information would have put an unwelcome and unhappy spin on the story, huh?

Van Halen Was Right

Panama rocks!

Jump back, what's that sound?
Here she comes, full blast and top down.
Hot shoe, burnin' down the avenue.
Model citizen zero discipline
Don't you know she's coming home with me?
You'll lose her in the turn.
I'll get her!
Panama, panama
Panama, panama

OK, the lyrics have absolutely nothing to with the early successes that advertisers are experiencing with Yahoo's new Panama paid search system, but I never let that stand in the way of a good non-sequiter.

+5% increase in clicks overall for week of 2/11, +9% week of 2/18. Google and their investors were so nervous about Yahoo's success that their stock dropped all the way from $466.19 at cob February 5th (launch date) to $463.75 cob February 26 (day before the "crash"). That's a drop more than one-half of one percent. Scary, huh?

Yahoo's Rich Media SNAFU

According to this story (registration required to view), PointRoll has written to its clients stating that Yahoo is going to make an effort to enforce their policy of charging fees for third-party rich media placements.

Yahoo have apparently pulled the PointRoll rich media ads of some clients and replaced them with standard ads. It appears the real reason behind the move is to try to migrate advertisers to use of rich media solutions from AdInterax, a company Yahoo acquired in the fall, and for use of which Yahoo would waive the fees (since AdInterax is not a third-party to Yahoo). PointRoll, who claim to have 70% of the rich media market, is a direct competitor of AdInterax.

If I'm a Yahoo media rep, I can't be too happy with having to field numerous phone calls and emails this morning from media-buying clients asking for makegoods on what's been switched out, and a bonus to salve hurt feelings. Yahoo might be an 800-pound gorilla, but it's a huge jungle out there, and Yahoo is already seen as a stumbling giant anyway. There are too many other online media vehicles out there for significant advertisers to cave to Yahoo on this.

On the other hand, there's no word in the story on whom the affected clients were, and that is a very large question. I have trouble envisioning Yahoo putting their foot down with their biggest advertisers (such as automotives, financials and the biggest direct advertisers) or their most coveted advertisers (such as CPGs) very hard. Would Yahoo risk ticking off an eight-figure spender just to try to strong-arm them into migrating their rich media technology to AdInterax? I doubt that.

I don't see Yahoo's strategy here succeeding for very long. Online media is a fluid commodity that is highly subject to the vagaries of supply and demand. If Yahoo loses business over this, the strategy will go bye-bye.