Beginning on February 5, Yahoo will be changing the way they rank pay-per-click ads. The rankings currently us bid price as the ranking method, meaning the higher the bid price, the higher the ranking of a pay-per-click ad. This coming change will include bid price and a quality score to determine relative rank, similar to what is already in place with Google AdWords.
What is a Quality Score?
A quality score applied to pay-per-click ads means that bid price is not the sole ranking method. This means that an ad with a lower bid price could rank above a higher bidding advertiser. While the exact factors involved in the quality score have not been divulged by the engines themselves, one influence is historical performance and performance relative to other ads displayed at the same time. Simply, if more people click on an ad, it can be assumed by democratic process that the ad is more helpful to searchers and could get preferred rating.
The quality score was devised to try to keep the playing field even. In a pay-per-click process based solely on bid price, nothing can stop a large advertiser with big pockets from taking top spots. In theory, with a quality score feature that effect is minimized as a small advertiser could compete with Wal-Mart by strategically picking keywords and writing well-focused copy for customers. In other words, better quality ads help with better placement.
This process has been used by Google AdWords for some time now, and it does make pay-per-click campaigns a bit more of an art form than a simple function of calculating a bid price. If your SEM vendor can’t tell you why your ad is not increasing in position despite bid increases, the quality score is the reason. (Interestingly enough, the quality score feature can also reveal which PPC vendors are truly savvy marketers versus those that practice "simple" SEM.)
Between now and February 5th, it would be a good idea to scrutinize your PPC ad copy. Also be prepared for some wild position fluctuations that week as well.