One of the first questions sales teams face when meeting a prospective business for the first time is “what does your company do?” We explain that Nett Solutions is a SEM who provides prime sponsored listings on Yahoo! and Google. Over the past two years it seems there is a Pavlovian reaction to this statement which automatically triggers a response of “I don’t want Yahoo! I only want Google.”
I believe that statement is a fallacy in the advertising world built upon subjective feelings rather than objective logic. I am not here to argue Google’s market share or to downplay its incredible success. In fact, Google tends to be my personal choice for search. I am simply sharing the perspective that it is not wise to neglect Yahoo! in an ad campaign. We have reviewed numerous metrics from our clients showing that some Yahoo! ad campaigns return a better ROI than Google. In each of these instances Google certainly showed more volume but the relative ROI percentage leaned in Yahoo’s favor.
I am a thirty-something who decided to re-enter the world of academia and pursue my MBA. I was dumb enough to register for a Finance course my first semester… not the wisest decision after a decade long layoff from school. Now, if you detest finance as much as I do, this blog will bring you nightmares and may cause you to break out in a cold sweat. On the first day of class our professor was refreshing our cobweb-laden minds about the topic of Capital Budgeting and Net Present Value (NPV). As a quick Finance 101 review, NPV is simply the present value of all the future cash flows of a project you are considering. In laymans terms, let’s say you wanted to buy a $100,000 machine for your business. To see if it is worth buying you want to calculate what the total estimated future revenue of that machine is worth in today’s dollars. If the NPV is positive (ie: worth more than $100,000) you should buy the machine since it more than pays for itself. If it is negative you should reject it.
So we calculated the NPV for three Projects and the answer came out as:
NPV of Project A = $3,986
NPV of Project B = $2,129
NPV of Project C = -$813
The professor asked the class “As a manager, which project do you want for your company?” The entire class blurted out a knee-jerk reaction of “Project A”. The professor immediately asked again, “As a manager, which project do you want for your company?” An insecure and subdued, yet still unanimous “Project A” was given by the students. After asking a third time, we caught on. As a manager you want BOTH project A and B since they both bring in a positive cash flow!
I believe this is a good parallel to the way people view Yahoo! and Google. Sure, one may bring about more volume than another but as long as they both bring about a positive ROI or cash flow you would be foolish to ignore one over the other. Whether it’s Yahoo, Google, print ads, or online display ads, all advertising channels will bring about different ROI’s. As long as the campaign is putting more in your pocket than what you spend you should continue to go with it.
Yahoo! just released their Q4 earnings report and announced their revenues topped analysts estimates. Sales totaled $1.26 billion. This surge in revenue was attributed to a rush in online spending. Remember, search engines only make money when people click on their ad network. People are clicking on Yahoo! whether you want to believe it or not. According estimates from organizations like comScore Inc., Yahoo! still holds nearly 20% market share. That’s 20% of the opportunities you may be missing out on if you have written off Yahoo!.
Cheers and go Team USA!
— Michael
Nett Solutions is a SEM agency working with Yahoo! and Google. We are a SoCal based company built of an eclectic cornucopia of: marketers, mothers & fathers, husbands & wives, college grads & MBA’s, surfers, church-goers, athletes, comedians (and those who think they are comedians). Our common bond is that we like to help people succeed.