I spent four hours this morning in a conference room at the Westin Hotel in downtown Chicago, watching along with a hundred other search professionals as a team from Yahoo! put their new Search Marketing platform through its paces.

To be fair, I have to admit I'm impressed. When Yahoo! bought Overture for over a billion dollars a couple of years ago, I thought they had gone nuts, since the Overture platform was quite possibly the least user-friendly piece of software in existence. They did well, though... so well that I—and many of my colleagues—found it irritating that Yahoo! didn't invest some of our clients' dollars in system enhancements beyond some moderate speed improvements.

Haven't We Met Someplace Before?

So here we are. The good news is that the new platform is tight, fast, and well thought out, with a clearly defined roadmap for future upgrades. Not surprisingly, Yahoo! borrowed heavily from Google's über-successful AdWords program. See if some of these features sound familiar:

• Campaigns are broken down into Ad Groups containing sets of keywords and creatives.
• Keywords are now exclusive to Ad Groups, rather than to an account, and are moderated by Campaign- and Ad Group-wide negative keywords.
• Ad placement is now a function of ad quality—meaning click-through rate—as well as maximum bid.

If you're having a hard time distinguishing this list from the AdWords version, join the club. The product is a little prettier, of course—AJAX being a pretty mature technology by now—but users looking for a quantum leap beyong the standard set by AdWords are going to be disappointed.

A Good Match

There is one major improvement to Yahoo!'s platform, which is going to change fundamentally the way advertisers approach Yahoo! Search Marketing. Say you sell widgets. In either version of the system, there are two ways to bid on a match to the keyword widget. If you bid on Standard Match, your ad would only display if the user searched on "widget". If you bid on Advanced Match, your ad might display following searches for "widget", "blue widget", or even "wigets".

Here's the issue. On the old system, any ads shown as a result of an Advanced Match only displayed after all the Standard Match results. Think about that. If you ever wanted your results to display on top of the heap, your only option was to restrict your bidding to Standard Match and then to bid on every keyword combination you could possibly imagine... often resulting in accounts containing tens of thousands of nearly identical keywords. This tied up Yahoo!'s servers and was an absolute nightmare to manage on the clunky old Overture-era system.

The new platform, on the other hand, makes no distinction between Advanced and Standard Match ads when it comes to display order. Operationally, this means that Standard Match is no longer something you're likely to use much—unless you have in mind some very specific, common phrases—because a combination of Advanced Match and negative keywords can almost always do the trick much more efficiently, and there's no longer any penalty for using them.

The result: a potentially life-changing cut in the man-hour requirement for managing a complex set of campaigns, and a corresponding reduction in the load on Yahoo! systems... meaning snappier performance for everybody.

And you thought Christmas couldn't come in February!

The Bottom Line

The economic theory behind many of Yahoo!'s changes—and I think it's a sound one—is to disincentivize search operators from engaging in bidding wars, in favor of creating compelling content and ad creative. Why a sound strategy? Again, because Google has been doing the same thing for a couple of years now, and it's served them well.

The bottom line here is that, as of June 2006, Yahoo! accounted for 23.8% of searches performed on the Internet. That's a lot of eyeballs, particularly since—at least in my own experience—Yahoo! traffic seems to be heavily weighted toward B2B and to convert at a high rate, relative to traffic from Google and MSN. Yahoo!'s legacy Overture platform was a dog by any standard, and it was high time they moved into the 21st century.

Now that they have, expect to spend less time and treasure managing behemoth keyword lists and playing bidding games, and more time writing great creative and planning compelling promotions for your customers.

Remember customers?