Yahoo to Begin "Smart Pricing" Process?

http://domainstate.com/showthread.php3?s=1f681f3fe60c0a38d7192845183a51fe&threadid=77920

Discussion suggests that Yahoo smart pricing has begun.  To be fair, Yahoo has employed a "discard rate" (which rhymes with the smart-pricing dynamic) for years now. So if this Yahoo "smart pricing" is for real, I hope there is a removal of the historical "discard rate" ..  If not, there would effectively be a double-tax on a publisher's earnings.

The most glaring problem with "Smart Pricing" is that those who employ it (Google and now reportedly Yahoo) hold their own traffic out as the 100% benchmark, so if you own traffic that converts two or three times as well as Google, you only get the 10 out of 10 score..  There is no such thing as 20 out of 10 to reward you if you're bringing better traffic to the network.

What the keyword marketplaces don't seem to understand is that by running smart pricing in this way, they incentivise "competitor markets" and "niche specialist shops" to cream-off the best publisher traffic and move it elsewhere. Inefficiencies are always exploited in technology and failing to correctly reward those who deliver the sales conversions is a pretty glaring inefficiency.

Also, this opens the door to mercantilistic publisher partners with high smart-price scores, willing to dilute their score down a point or two by knowingly backfilling low quality traffic onto their networks. Nothing like turning a 0 into a 7 if it only costs your 10 a half a point to a point.. arbitraginging traffic volumes to gain a tactical advantage.

All things to watch and consider as this new development changes the gaming of the rules.

Comments

[William B]

I have parked names with www.parked.com and I just received an email that Yahoo is implementing smart pricing immediately. I was told that I would be receiving my Traffic Quality (TQ) scores for my names. It was stated that it would be effective for all parking companies that utilize Yahoo. Frank can you give us in layman's terms what effect you think this will have?

***FS*** I think it will be negative initially .. but then positive as advertisers can pay more for quality traffic. Forecast: Short term pain, long term gain.