Yahoo! posted 6 frequently asked questions about its Ad Optimization feature. Since the feature is turned on automatically whenever you set your ads to live status, we figured we’d cover this issue today and answer the question: Should you use the feature?
Here’s a basic run-down on what the feature does for you: If you are running more than one pay per click ad and you are using the ad optimization feature then Yahoo! will start out displaying the ads an equal number of times then switch to using the one that achieves the highest CTR most often. There is a huge problem with this strategy.
Let’s say you have three ads that target the same keyword phrase but are written slightly different. Ad A appeals more to a certain segment of your target marketing, Ad B appeals to another segment, and Ad C appeals to both segments equally. There is no crossover between the segments of your market attracted to ads A and B. If your two market segments tend to appear online at different times – let’s say segment A is on from noon to midnight and segment B is on from midnight to noon – then Yahoo! could be skewing your ads based on the time. Let’s see how …
Suppose your ads go live at 12:01 p.m. By midnight your segment A ad enjoys a 50% lead in CTR over your segment B ad and has a 10% edge over the segment C ad. Now Yahoo! starts showing your segment A ad more and your segment C ad slightly less but your segment B ad is only being shown 25% of the time – at a time when half of your target market would respond to that ad more than the segment A ad, which is being shown most often. You are losing money.
I don’t recommend this feature for most advertisers. New pay per click advertisers may be tempted to use the ad optimization feature, but I would caution you against it. You are much better off testing your own ads at different times of the day.