Hitbox released conversion stats by search engine. However, those statistics only tell part of the story. When determining where and how to advertise, those are not statistics one should rely upon to make financial decisions.

All traffic converts differently by industry, offer, search engine, paid, organic, b2b, b2c, etc. While averages are good to know for benchmarking your own success, it should not be used as a solid figure until you have all the facts associated with any study.

Here are the conversion numbers from the Hitbox Press Release:

Hitbox did make note of the following two items:

• Study examines only the conversion rate, not the ROI generated by each major search engine
• E-commerce sample: The select business-to-consumer e-commerce sites used in this study generate more than $3 billion in annual online sales

One other important consideration to note in this study, WebSideStory officials said, is that the conversion rates are likely higher than industry averages because the sample sites are using best-of-class web analytics to improve their search engine marketing and optimization.

Source: Hitbox Press Release

What this table doesn’t show:

• PPC vs Organic Conversions
• Content Match vs Search Conversions
• Rich media & Banner Ad Conversions

If one considers the Organic vs PPC Click Through Rates on any search engine results page from this ClickZ Article:

It is possible, the PPC vs Organic Conversion Rates could look like this:

Note: The above chart is for explaining a point – it is not based on any factual numbers.

In the above chart, we suddenly have a very different picture of what could be the potential highest converting traffic sources for each search engine.

While, with any numbers, we could make assumptions (like on Google, due to the PPC relevancy factors, PPC conversions are higher than organic listings or maybe, due to how Yahoo appears on those with a 800×600 screen resolution, surfers click a lot of ads at the top of the page, but the higher conversion rates come from those looking further into the search results) – they are just that: assumptions.

Test your traffic by source. Not just by engine. Not just by PPC. Test traffic by source (PPC, organic, banners) by engine by keyword.

Only by drilling down into the conversions can one really understand how various traffic streams convert for your particular website.

Microsoft’s Xbox, it’s flagship gaming product, is going to incorporate the Xbox with Spaces (Microsoft’s blogging platform) and then allow bloggers to monetize the blogs with Kanoodle (as reported by eWeek).

Microsoft’s impossible to find Xbox is internet enabled. Its users make up much of the ever elusive 18-25 male demographic. To date, the Xbox has allowed one to organize music and some other features, but hasn’t had any major internet capabilities outside of the gaming concept.

Kanoodle is a pay per click service that also serves contextual ads (ads based upon the text of a webpage).

This deal could allow Xbox users to post directly to a blog, keep track of high scores, cheats, tips, and anything else related to gaming (or just their life in general as many blogs are very similar to diaries), and make money off of the ads. Most likely it would be a revenue sharing deal with Microsoft. MS will handle the ad serving, the gamers write the content, they split the ad revenue.

A combination of gamers, blogging, and PPC ads could bring in the best of many worlds for Microsoft. It brings an elusive demographic into a centralized ad serving environment. It has the gamers creating the content, thus allows Microsoft to expand its content base with other people’s writings. To ‘pay’ these writers, it splits the profits with them.

How one will post to Spaces, opt in to the impossible-to-find-Xbox blogging platform, have ad control, and all the small details have yet to be released.

While this seems like small news, it’s a huge step in what I think is Microsoft’s real goal: To control the living room.

Roughly half of the US income is disposable; meaning it is spent on items besides the standard bills & rent. The leading portion of this disposable income is spent on entertainment: anything from iPods to game to DVDs to flat panel TVs, etc. We are an entertainment driven culture.

In the past, control of the living room has been in the hands of the major TV, stereo, and gaming console creators. Microsoft threw its hat into this lucrative market with the media PC and Xbox.

By combining the living room, the internet, and the associated entertainment into a single environment, it seems Microsoft has hopes of further controlling this disposable income. The last offering to really try to combine the living room with the internet was WebTV. WebTV didn’t have a lot of success, but did teach others some good lessons on combining these various aspects.

This interesting combination of the Xbox with the internet also has underpinnings of its own ‘social network’ akin to Yahoo’s 360, Friendster, or MySpace. Social networking has been brought up time and time again over the past year by the major players as a way of recruiting and maintaining a stable user base. The goal is to have that user base vested in the site, friends, and content – thus the network owner can offer many free offerings to keep and grow the base, and the user base is thus monetized through ads or subscription fees. Its seen by many as a win-win combination. The user base has the chance to become part of a community and receive their own ‘space’ on the web while the network makes money on the user base through a variety of means.

It has yet to be seen how Microsoft will combine all of these aspects in a central environment with the Xbox and Spaces. However, the concept is brilliant. The execution and adoption of users will be the ultimate decider of how well the play is executed.

Google and Yahoo owe a lot of their growth to the pay per click phenomena of advertising. The majority of Google’s total income (estimates are around 98% of their total income) is from search based advertising.

Pay per click (PPC for short) is a simple system where advertisers bid on a keyword, and then when someone searches that keyword (often called a user query) on a search engine, the advertisers ad is displayed along with the usual search results. If a user clicks on the advertiser’s ad, then the advertiser is charged based on how much they are willing to spend per click.

Advertisers only pay when a searcher clicks on an ad, hence, pay per click.

Click fraud has been unofficially labeled as clicks on pay per click ads originating from illegitimate sources. This can occur for a large variety of reasons from advertisers competition to publishers wishing to line their pockets.

Click fraud has been widely discussed over the past year. The most recent mainstream press was from a Wired article that received some excellent discussion in a WMW thread.

It’s pretty common for search engines to be tight lipped about click fraud, detecting clicks, and what users can do about it.

While click fraud is an issue, so are traffic spikes that appear to be fraud – but aren’t. A syndicated ad onto the front page of CNN or ESPN can receive a huge traffic spike, unfortunately, often these additional clicks don’t always turn into additional sales.

News can also trigger these spikes. In fact, on the same page that Yahoo admits the potential for click fraud, they also acknowledge traffic spikes:

Some keyword markets have a lot of volatility in their quantity of clicks, sometimes leading to traffic spikes that might be interpreted as fraudulent activity. Imagine how many added clicks bidders for the term “Janet Jackson” received after the infamous Super Bowl incident. If you see an unexplained surge in traffic, it can often be related to a news story. Our Click-Through Protection team is trained to identify these click spikes and their possible legitimate sources.

This is a very accurate statement by Yahoo. On several occasions there have been large traffic spikes for niche keywords that appear to be click fraud based on historical search history. However, investigation into the traffic often shows why the spike happened and that they were legitimate visitors.

This is also one reason that it’s very important to stay on top of the news and your keywords. If the advertisers for ‘Janet Jackson’ had anticipated the additional traffic and paused those keywords, they wouldn’t have received clicks from those searching for additional info on the incident.

However, this isn’t to say one should always pause keywords when a story breaks. There are times that a news story can propel sales as well as additional traffic. One must determine user intent for the search on those keywords to make an appropriate decision.

Back to the click fraud issue. While Yahoo has made a few public statements (and many in private at conferences), Google has stayed very quiet about how they track fraudulent clicks. Yahoo has mentioned a few points, however, this is one of the more specific published pieces of information to date:

Yahoo! Search Marketing’s click protection systems are in operation 24 hours a day, monitoring each click and filtering out those that are questionable or clearly unqualified. To do this, we track search-and-click patterns across more than 50 data points—including IP address, users’ session information and browser information, and pattern recognition—to help detect invalid clicks.

50 data points is quite a lot . I’ve hard Google engineers discuss in private that they do snapshots of browser versions, screen resolution, if cookies and java are enabled, etc – and put together information about a system to help determine if someone moving through anonymous proxies is in fact the same system, hence, it could be related to click fraud.

Onto the juicy part, Yahoo admits no one can detect every fraudulent click.

From the Yahoo Search Marketing Handbook:

We acknowledge that no system, no matter how sophisticated, can detect every invalid click. While bid prices will ultimately reflect the true quality of the traffic, Yahoo! Search Marketing continues to spend substantial time and money to make sure that our technology leads the industry. To further our efforts, we also rely on, and encourage, our advertisers to bring possible invalid clicks to our attention.

This is a very interesting acknowledgment. It’s also very true. Click fraud done randomly with sophisticated technology is nearly impossible (if not completely impossible) to detect.

While the click fraud department probably receives both many cases of fraudulent and legitimate clicks, there have been many stories about Yahoo just giving refunds when the traffic doesn’t ‘appear right’. This could be a case where a word had a sudden spike in traffic for no reason. Of course, Yahoo doesn’t state if they found illegitimate clicks, but they go ahead and refund the money anyway as the traffic just doesn’t adhere to a normal pattern.

I do believe the media has made more out of click fraud that actually exists. Often these stories are spurred on by ‘click fraud detection companies’. Since these companies receive more clients the more they can convince the public click fraud is a huge issue, of course they like the spin that click fraud makes up a large percentage of all visitors.

In any case, it is interesting to note what Yahoo has published in this new handbook (which is an excellent read if you use Yahoo Search Marketing PPC).

The general consensus of click fraud in 2006 looks like this:

1. Click fraud will continue to be an issue.
2. The search engines will continue to develop better technology in fighting it.
3. Frauders will continue to develop better systems for perpetuating click fraud.
4. Advertisers sit in the middle, monitor their clicks, and suffer the consequences of fraud.

Many of the media stories about click fraud leave the impression that advertisers are very helpless in the issue. However, many marketers have stated that they adjust bids by conversion and ROI (return on investment) so click fraud is already taken into account based on the various markets. In these instances, the total dollars available to the search engines don’t rise. If click fraud were less prevalent, these advertisers would just bid higher as their conversion rates would be even higher.

So who does click fraud really hurt? Actually, everyone. Due to the media stories, less advertisers try search marketing. The less marketers, the less search engines make. And don’t forget the searchers – they do like (and click) on these ads (the proof is in Google’s net worth and advertisers ROI).

It’s good to see Yahoo acknowledge click fraud. Only by search engines and advertisers working together will it be stopped. One group alone doesn’t have enough data to see all the search and click patterns. Without all of the data patterns, there is no way to tell if clicks are legitimate or fraudulent. If everyone starts to work together in data collection and sharing, then click fraud will start to be a battle that the PPC engines can win.

In a move that has been anticipated for quite some time, Yahoo announced yesterday that they will change the look of their paid results (those from Yahoo Search Marketing) beginning mid-January.

A new look is coming to the Yahoo! search results pages that
will translate into more clicks for your listings. On January
18th, Yahoo! will debut a streamlined design that will make
the search results displayed on Yahoo! even easier for
consumers to read. Our research has shown that by improving
the search experience in this way, advertisers can generally
expect to see an increase in clicks, while maintaining their
conversion rates.

How this change impacts your listings:

* Yahoo! will display shorter descriptions for Sponsored
Search listings
* You don’t have to make any changes to your listings; they’ll
be automatically shortened for you when displayed on Yahoo!
* If you’d like to optimize your listings for Yahoo!, begin
your description with one short sentence that includes your
keyword and focuses on your most important information in
the first 70 characters
* Over time, we will fine tune the exact character count that
we believe works best for advertisers and search users
* Most of our partners, including MSN, CNN, ESPN and Infospace,
will still display longer descriptions for your Sponsored
Search listings, though the exact length may vary from
partner to partner

Yahoo! is taking this step to improve the search experience
for its users. By continuously focusing on delivering highly
relevant search results in a user-friendly format, Yahoo!
also gives you the best possible platform for reaching customers
interested in what your business provides.

At present, on a 800×600 screen resolution (still used by a decent percentage of the population) Yahoo results are all paid except for the top organic listing. If Yahoo has a few special offerings for that result, or it has a decidedly local flavor, it’s possible that no organics from Yahoo will show, but instead local.yahoo.com links will be in that single spot.

What will make this difficult for advertisers is making determining exactly how your listings look at the 70 and 190 character limit. It might be best to build a 70 character ad for Yahoo; and then layer on an additional 120 characters for their partners.

The paid results on Yahoo are still based around the original pay per click engine launched in 1997 (full Yahoo Search Marketing Timeline here).

Several marketing studies, search usability studies, user experience studies, etc, has led them down this path. Interestingly enough, these new limits are strikingly similar to Google. One of the major differences between the search experience on Yahoo and Google is additional integrated offerings.

While both Yahoo and Google have properties that include classifieds, images, news, local, etc. Yahoo has many offerings for small businesses such as hosting, offerings for romantics such as personals, offerings for travelers such as Yahoo travel, etc. How Yahoo maintains exposure of it’s own properties while giving searchers a wide selection of options for finding information will be interesting to see.

Hopefully, they’ll finally give in and include Mindset results.

It has yet to be seen how this will affect CTRs (click through rates) of advertisements on Yahoo and how much this will help their profitability versus the user experience.

I’ve been expecting this, and several other major changes from Yahoo, in Q of 06. Stay tuned for more, this won’t be the only significant change Yahoo makes in the next few months. They’re starting to work on their magic formula for success, and not likely to slow down anytime soon.

Yahoo local has quietly become one of the best search properties on the internet. It has allowed small businesses to update their business data and to tell searchers about their business. This distribution of local business data is crucial to the new wave of local business promotion.

Based on various verticals, the data being displayed is actually different. Yahoo Local was one of the first properties to realize that each vertical needs different display fields. A hotel doesn’t need a menu display, a restaurant does. A pizza restaurant needs a delivery area, but a plumber needs a service area.

As yahoo local expands, expect to be able to search based on your location and not see who is closest to you (the default options on most local properties now) but a list of those who will service your area – a very different algorithm.

It is estimated that 25%+ of all search queries have a local intent. This is a large number compared to the actual usage statistics of local search properties. Yahoo local has integrated very unobtrusively into Yahoo search (show screen shot of stars) by showing some listings when the search is determined to be local in nature.

Yahoo Local profiles are gathered in three different ways, user generated, spider generated, and data provider backfill.

If Slurp, the Yahoo spider, finds information on your website that it determines to be local, it may attempt to find your business address, name, phone number, etc and then match it up against data provider backfill and creates a profile for you.

The second way is user generated. If your business is not listed, then you can log into your Yahoo profile and fill out your business information. Yahoo not only allows you to have some custom information, but also allows for a small 5 page website. The website does have ads on the right hand of the page, often for a competiting business, so if you already have a website, you’ll receive very little benefit from this. If you don’t have a website, a registerlocal.com profile listing may be more to your liking.

The last method Yahoo uses to create business listings is by data provider backfill. Yahoo has some deals with large data providers to provide them with accurate business information and then takes this information and displays it on the Yahoo property.

How to Create Your Listing

The first step is to do a search on Yahoo for your businesses. If you find it, you should see a link that says [insert screen shot here of is this your business]. You can follow that link and take control of the listing. (Important: Please read ‘Hijacking Yahoo Local’ listings‘. You can lose a free business listing at any time, and there is only one way to make sure you control your own business information).

Once you’ve taken control of the listing, you can update the business information at will. There is usually a short delay as Yahoo reviews this information before it goes live on Yahoo properties. In some industries, we’ve noticed a longer wait time than others. Presumably, sensitive verticals maybe looked at closer before allowing information to be changed.

If you don’t see your business on Yahoo, then follow this link to add your business.

Important Information
Yahoo uses several different algorithms to determine Yahoo Local Rankings. The first is proximity. These results are based on the distance between a user and the business – pretty straightforward.

Another is user reviews. Other Yahoo users can review your business. This is very important to pay attention to – this is a public perception of your business. It is suggested that you review you businesses, ask your customers to review your businesses, and maybe even offer $5 coupons or something once a customer has reviewed your business on yahoo. The total number of reviews and the average star review (1-5 stars) can help your businesses rank higher in the search algorithm.

The last method used in ranking is keywords. Keywords, like in all search, matter. Keywords in your title, in your description, in your brands, in the reviews, everywhere. Do NOT stuff keywords. Not only will Yahoo possibly ban or remove your listing, keyword stuffed profiles look uglier to a user and the CTR from the business profile to the listing is lower. In addition, there is enough information at this detailed business view to call your company. If your profile does not look attractive to a user, the odds of them wishing to do business with your company is less.

Yahoo does offer an enhanced listing. This option is roughly $10 per month. I’ve not found any priority in the algorithm using these advanced listings, however, the data is protected. No one can hijack your listing if you’re paying for it.

Overall, Yahoo is one of the leaders in building a community around a local search property. Their forward thinking and success in this arena will only grow stronger over the coming months and years. If you’re looking to build your local presence, a Yahoo listing is a must.

The Google AdSense blog just published the new details on the AdSense referral program.

Users who sign up for AdSense through your referral button will learn about a great product, and you’ll have a new way to generate revenue – $100 when each user you refer first earns $100.

There are a large number of banners that can be added to a website, including some that are not the usual AdSense size blocks.

Pretty simple information, and it was very much expected.

The part I didn’t expect was that Google is also paying $1 for every Firefox user who installs the Google Firefox toolbar.

Again, quite a few different banner sizes, some as small as buttons.

No text links for either program – only images, which seems out of character with Google’s fascination with everything text, and slow adoption of images overall.

The real question though is: Why is Google giving away this money?

• Are they recommending firefox?
• Are firefox users finding better plug-ins and not using the toolbar?
• Are firefox users not giving Google all the data it collects through the toolbar, and they need a higher firefox penetration?

It’s interesting to see Google not only push a browser and toolbar, but to pay for referrals.

If you’re willing to pay for something, you usually get something in return.

• Is it uses?
• Or data collection?

Personally, I uninstalled every Google product after both the GMail notifier and the last Google Toolbar updated itself on my machines without my permission. I consider this a security breach, and someone else trying to control my software.

It will be interesting to see what else Google starts paying for in the future. How about AdWords account referrals?

Found via the Ask Blog.

Desktop search has been hot for quite some time.

Control the desktop, control the online experience.

Control the information retrieval, control the information.

These seem to be some of the mantras behind the plethora of desktop search offerings by Google, MSN, and Yahoo.

Ask joins the fray with an upgrade to their desktop search.

Quite a list of new improvements in this release.

Ask’s new management seems to keep them rolling out new features. I’m sure some of them are really for internal use, but why not give those to the public as well to increase user share? Seems to be the way their operating these days, but competition can only be good for the end user.

The NY Times did an impressive five page story on Google’s entrance into Madison Avenue and their wishing to be a player in every advertising market.

Greg Sterling, of the Kelsey group had a quick comment on the article:

Traditional ad agencies don’t generally like or get Google, in my limited observation. But it’s Sunday night, so I won’t go on.

I do wish Greg would have had a bit more to say about the article as Greg really gets local advertising, search engines, and the online world; maybe he’ll follow up with more comments at a later date.

John Battelle had quite a bit to say about the article.

This piece in the NYT was clearly written with Google’s open approval, and that means one thing: Google is using the Times to talk with the folks on Madison Ave – and Wall St. And I have no doubt those folks are reading – closely.

Interesting to see how the rest of the search engine and advertising world responds.

Google has upped the ante with their new desktop launch:

An entire page dedicated to desktop-plugins.

I still don’t use Google desktop.
The last two Google applications I installed (the Google Toolbar, and GMail notifier) automatically updated their software without my permission. I consider this a huge security breach (not to mention, it’s MY computer) and have never installed another Google application since.

However, the plug-in based system looks interesting, can’t wait to read some reviews of others who end up installing it.

Official Google Blog Info on the subject.

It Conversations has an audofile conversation with two well known people in search, John Battelle and Sergey Brin.

I have only recently discovered the site, and it seems like there are some very good thing going on over there with Pod Casting and interviews in general.

Anyway, John and Sergey – enjoy the file.