Class Action Settlement against Yahoo is Great News for PPC Advertisers

By Tad Miller | Oct 13, 2009
More Articles by Tad


We have been reporting on Yahoo traffic quality issues for years, and have trumpeted that we thought is was wrong that Yahoo wasn’t allowing much in the way of transparency about its PPC traffic and wasn’t offering enough filtering options on its Search Network to eliminate what we believe are fraudulent clicks.

Techcrunch is reporting today that Yahoo is settling a 3 year old Class Action Lawsuit brought by Yahoo Search Advertising customers.

The lawsuit (PDF) alleges that customers contracted for targeted ad placements through two products, “Sponsored Search” and “Content Match” (and predecessor products provided by Overture and GoTo.com) and that Yahoo! breached its contract with its customers by allowing Yahoo! ads to be displayed in spyware, domain name parking sites (bulk registration sites), pop-ups, pop-unders and typosquatting sites. According to the message, which is reproduced on a dedicated website about the case, plaintiffs brought claims for breach of contract, unjust enrichment, misrepresentation, civil conspiracy, and unfair business practices.

Interesting tidbits about the lawsuit:

During the course of the Action, Yahoo! has produced over 1.5 million pages of documents and hundreds of gigabytes of data. Yahoo! employees testified at deposition. The plaintiffs or class representatives did much of the same. Yahoo! has apparently entered into the proposed settlement to avoid further expense, inconvenience and the burden of drawn-out litigation.

Most importantly for Yahoo PPC advertisers going forward, new filtering options that will allow advertisers to clean up low quality traffic on the Yahoo Search Network and Content Network:

In addition, the Sunnyvale company has agreed to launch a new filtering option for ads, and to make some other modifications to the way it handles disclosures and click fraud investigations:

Yahoo! has agreed to develop and offer a new ad placement option that will enable Yahoo! Ad customers to control where their Yahoo! Ads appear. The Ad Placement Option will allow Yahoo! Ad customers to specify that their Sponsored Search ads should be displayed only on websites and other Internet properties owned or operated by Yahoo!, and the websites of certain “Premium” distribution partners. According to the docs, Yahoo! has agreed to make best efforts to launch the Ad Placement Option as early as the first quarter of 2010, but in no event later than September 30, 2010. Yahoo! will maintain the Ad Placement Option for at least two years from the date of its launch.

What does this mean?  You will be able to eliminate “Parked Domains” from your Yahoo traffic and should have the ability to eliminate as many search partner websites as you choose going forward.

This could mean a short term reduction in Yahoo’s ad revenues.  But with traffic quality improved, many advertisers may come back to Yahoo and may start bidding more aggressively thanks to increased conversion rates produced by the cleaned up traffic.

We have been hesitant to recommend advertising on Yahoo for all of the reasons indicated above for some of our advertisers.  If the filtering options actually delivered are as promised I think we will begin recommending advertising on Yahoo to all advertisers.

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