I've been building up a relatively large campaign across the PPC engines for a client of ours, and have noticed a disturbing trend with the AdWords vs. Y!SM numbers.
Yahoo! is consistently half the price, and double the ROI. The site's conversion rate with visitors from the Yahoo! ads, which display on Yahoo!, MSN & several smaller engines are consistently outperforming the Google ads by a magnitude of double or better. These are the same ads, with the same landing pages and the same search terms. The cause is a mystery indeed, and I don't want to chalk it up entirely to demographics (yet).
I will say that Yahoo!'s performance has been exceptionally good - the conversion rate across the terms is over 10%, while Google's is under 5%. CTR is also exceptional - 7.5%, while Google's hovers around 4.5%. I'm testing new ads and further refining the landing pages, but I'm skeptical about what Google is reporting and certainly very concerned about just how "inflated" their click and impression count is. Rumors of widespread, low-level click fraud are nothing short of alarming.
The CTR, CPC and conversion rates all depend on the industry. My client spends around $2,000 daily on advertising via Adwords and Overture.
The CPC on Adwords is usually tied or lower then that of overture. The conversion rates are somewhat lower on Adwords but I believe the adsense program is the cause of this. I do content matching with Adwords and Overture. Many people frown upon using content match within Adwords, however, our conversion rates are high enough to justify it.
Yahoo's content match I believe is less prone to fraud and the like.
The click through rates within search advertising are close enough to call it a tie. Overall, I do receieve higher CTR with Yahoo due to the fact that content matching seems to always provide lower CTRs and Google's content matching service delivers many more impressions - a larger percentage than that of Yahoo's.
That's my take on the situation.
I hear a lot of people saying the MSN/Bing's traffic converts the best but their traffic is so low that it doesn't really matter. Guess that'll be a moot point in the next few months.
I definitely agree with both of you. My guess for the price differential is that Google is just more competitive. There are more people advertising there, as well as participaters in the content network. For search results, it makes sense to me that the greater the competition, the higher the prices.
In regard to Yahoo! conversion, honestly, I used to think their results pages were more misleading than Google's. But now that Google has followed in placing results on top of the natural results, they are about equally confusing to novice users. And, in my opinion, it is exactly these users who are more prone to convert because they are more quick to click on whatever is in front of them. I know this sounds over-simplified, but I've always felt that the Yahoo! user is less savvy than the Google user. The less-savvy user (regardless of what engine he/she may use) is also less likely to go through a full research phase to their buying cycle, which translates to better conversions for us SEMs. Is this what you mean by "demographics," Rand?
I wouldn't be so quick to scream click fraud yet, though. With Google's budget, I'm sure they have excellent tracking and click fraud technology. Since you're already revising ads, I would try writing more "high-brow" ads for AdWords and keep your YSM ads at status-quo. If there is more technical information ("30% savings" or "drill-down reporting," e.g.) you can include, I bet it would fly better on AdWords.
Over the past year, I've definitely seen a trend developing in AdWords: competition is getting fierce. I'm paying more for terms that were once in a non-competitive category. And it's just going to continue since many SMBs are just realizing now that they can incorporate P4P (PPC) campaigns with even a meagre budget.