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We recently discussed the changes Yahoo had made to its Sponsored Search and Content Match Program Terms that gave the company the ability to proactively change advertiser campaigns in the name of 'optimization'.

Yahoo's changes caught many advertisers off guard, infuriated some and raised a number of thorny legal questions.

Yesterday, Yahoo responded to concerns over its changes on its Search Marketing Blog. In the post, Yahoo states that much of the discussion around its changes has been "misinformation" and it wanted to set the record straight.

According to Yahoo, its changes are designed to assist small-to-mid-sized advertisers improve their campaigns by offering assistance that is typically only available to larger advertisers. Yahoo states that the scope of the changes is limited to the following:

1) Creating new ads for existing ad groups and enabling ad testing
2) Writing multiple versions of ads for any new ad groups we create, then enabling ad testing
3) Searching our database for keywords that can drive more targeted traffic to an advertiser’s site

Yahoo says it will not up your spending limit, not change maximum bids for keywords, not remove your existing keywords and not change your campaign tactic settings.

Of course, one of the individuals we spoke to claimed that these things were done to his campaign, resulting in a $4,000 bill, and it's still quite unclear what criteria Yahoo is using to determine which advertisers are small-to-mid-sized. One comment left in response to Yahoo's post comes from a Yahoo advertiser who wrote:

We ARE a large advertiser who has in house team of dedicated personal to PPC, a fact our rep was well aware of, yet you still made so called “optimizations”.

Even if one gives Yahoo the benefit of the doubt, there's no denying that Yahoo's lack of communication left many advertisers feeling deceived and frankly, I think Yahoo's decision to make the program opt-out instead of opt-in is questionable.

But beyond that, Yahoo's post fails to address the most important question: the legal issues its proactive optimizations could raise for advertisers and Yahoo itself.

As discussed in my previous post on this subject, one technology attorney we spoke to observed that Yahoo's involvement in its advertisers' campaigns created a number of potential legal risks for both parties. As such, he called Yahoo's program a "foolish approach".

According to Yahoo, however, everything is going smoothly and the changes are benefitting advertisers. The company has "optimized approximately 2% of all active accounts and created approximately 20,000 new ads" and claims an acceptance rate of around 80%. Since the program is opt-out, however, I would point out that calling this an 'acceptance rate' is a bit of a misnomer, since the rate is almost certainly higher than it would be had the program been opt-in. As Andy Beal at Marketing Pilgrim points out, it's likely that most advertisers probably haven't noticed the changes and most haven't complained.

Yahoo quotes one advertiser who reported that Yahoo's optimizations decreased its cost-per-conversion by 50% and while it's quite possible that the optimization program will benefit some advertisers, I don't expect Yahoo's blog post to change the negative perceptions that have been created.

Yahoo has implemented the wrong strategy (opt-out), botched the introduction of its program (by not communicating with advertisers from the start) and by insinuating that bloggers simply didn't understand the program, is only likely to incite more anger.

All in all, Yahoo has demonstrated why it is important to get everything right when implementing a new program. From strategy to execution, had Yahoo done the right thing, it could have avoided this PR mess.

Patricio Robles

Published 29 January, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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