Yahoo Publisher Network's Trojan Horse

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The Last Temptation of the iPhone

Google has a hefty lead in getting small publishers to put Google-powered ads on their websites. There is no negotiated deal – advertisers agree to take whatever Google decides to give them. Revenue share terms are not disclosed to these small publishers. The publisher simply places a piece of JavaScript code in the code of their website, the ads appear, and a check comes in the mail. For some, this is easy — for most, they don’t know the first thing about getting code into other code; so they likely hire someone to do this for them, then just leave it alone.

So there’s a large base of small (and some not so small) websites out there that now use Google AdSense to make some money. Plus, Google has a stranglehold on the pay-per-click (PPC) text ad market (just look at their earnings), which means increased advertiser competition, which drives cost-per-click (CPC) up on ads, which provides publishers with maximum revenue potential — well, assuming the rev-share % Google provides is the same as Yahoo!, Microsoft, or AdBrite. But no one really knows how much Google provides (99% of) the publishers using Google AdSense, which is really kind of a shocker — we’re all just trusting that Google is compensating us well, when really they could be taking 70% of the ad revenue and only giving publishers 30%. Google doesn’t disclose the rev-share to publishers.

Yahoo! was slow to the contextual ad game, but they are here now. They finally rolled out Yahoo Publisher Network (YPN), but it’s still in beta — you can’t actually get an account immediately, but rather only be considered for the program. Publishers have been using Google AdSense — why would they switch? Plus, publishers don’t want to mess with their code — removing Google and replacing with Yahoo code.

One way Yahoo can compete is on price and transparency. Simply giving publishers a higher percentage of the total pie, and actually disclosing what that percentage is, would convince many publishers to switch. But not all – the fact is that Google’s AdSense code is embedded on many websites and the switching costs are enough that they just won’t change to Yahoo.

Enter MyBlogLog

However, many publishers are finding the value in MyBlogLog — a distributed social networking platform that allows readers of blogs to learn more about each other and communicate with each other. Publishers — mostly bloggers — have been adding this code to their websites. Once you can get a publisher to add code to their website for your widget, they typically aren’t going to take it down.

I’m sure Yahoo! has plans for taking advantage of having this MyBlogLog widget code on many websites, to somehow edge their YPN code on to these websites — or simply integrate YPN into the MyBlogLog widget that already exists, so that publishers wouldn’t have to touch a thing. Coincidentally, MyBlogLog (Yahoo) is also tracking information on Google AdSense — how many clicks Google AdSense ads are receiving (on webpages that have both MyBlogLog and AdSense installed), the ad unit size, and what webpage those clicks occurred. Yahoo doesn’t know the CPC for each of Google’s ads, but they do know the click-through rate (CTR) — and can specifically target high CTR publishers first, with their YPN offering.

But even with the MyBlogLog widget access, publishers are looking for more money at the end of the day — the YPN offering would have to practically guarantee much more money to the publisher, in order to spur adoption and convert AdSense customers. Considering Yahoo doesn’t have as many advertisers as Google does, I imagine that 9 times out of 10, Google is able to compensate publishers more per click (once again, depending on the rev-share percentage back to the publisher).

Editor’s Note: Post by Steve Poland, whose blog Techquila Shots brainstorms web start-up ideas.

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