As we are fin­ish­ing up our analy­sis for our Q4 2010 online mar­ket­ing report we have noticed trends in the Yahoo-Bing tran­si­tion that we would like to share with you.

1.       Mar­ket­share:  Our analy­sis reveals that lower qual­ity traf­fic was culled dur­ing the tran­si­tion and as a result the impres­sion vol­ume dropped sig­nif­i­cantly.  How­ever, this has had neg­li­gi­ble impact on click share which decreased by 2.5% and on spend share where do not see any tan­gi­ble impact.

2.       Rev­enue per Click (RPC): As traf­fic qual­ity improved, RPCs rose through­out the Yahoo-Bing tran­si­tion. At the start of the tran­si­tion RPCs on the com­bined plat­form were 20% worse than Google but by the end of Decem­ber the RPCs on Google and Yahoo-Bing were identical.



1.       Cost per Click (CPC): Adver­tis­ers responded to the higher qual­ity traf­fic and higher ROI by increas­ing their bids result­ing in higher CPCs on the com­bined plat­form. CPCs on the com­bined plat­form caught up with Google CPCs by the end of Q4.


Our Out­look

1.       While the Yahoo-Bing tran­si­tion did result in a small drop in click share and spend share, the loss should be a tem­po­rary blip for two rea­sons. (1) Q4 is strong for retail where Google is over indexed and (2) Smaller adver­tis­ers will start allo­cat­ing greater bud­gets to Yahoo-Bing as they notice the higher ROI opportunities.

2.       Ana­lysts will be well advised to not use impres­sion share as a bench mark as Bing’s algo­rithms are stricter about serv­ing ads to higher qual­ity traf­fic. Click and spend share are bet­ter mar­ket share benchmarks.

3.       Given that the ROI on Yahoo traf­fic was 20–25% worse than Google’s and Bing’s ROI was 25% bet­ter, the weighted ROI of the com­bined traf­fic should have been 5–7% worse than Google. How­ever, it is about the same as Google now. Thus, Bing has done well on this front. How­ever, it remains to be seen if it can expand its click share while keep­ing its RPCs high.

We look for­ward to pre­sent­ing more insights about the tran­si­tion and other mar­ket trends in our upcom­ing quar­terly report.  Stay tuned !

Dr. Sid­dharth Shah
Direc­tor, Busi­ness Analytics

Note: I would like to thank Joe Romero for com­pil­ing the data.