Amr Awadallah Blog

This is a funny story that happened earlier this year, it was on Tuesday Feb 8th, 2007, the first day immediately after Yahoo launched the new Panama backend for sponsored search results.

Yahoo has a real-time tracking system (RTTS For short) that reports search activity (PVs, clicks, CTR) on a minute-by-minute basis, that system is also hooked into the alerting/paging systems. Anyway, since this was the first day of Panama, every body was watching these realtime graphs like a hawk.

The day started well, and the click volume was higher than last week as our testing predicted, but then around 1:10pm (pacific) the sponsored CTR metrics (i.e. clicks/pvs) took a rather alarming dive. This is a bit of an exaggeration, but imagine red lights flashing every where, a siren sound similar to that in submarines, people running every where, pagers beeping relentlessly, play-book procedures getting activated, hearts falling to the ankles, etc.

It took us about 20 minutes to realize that the problem was Anna Nicole Smith. You see, the news about her death came out around that time, that lead to a huge spike in searches for her name, some advertisers were bidding on her name, but most folks were searching then clicking on the news results we show at top of the search page, hence it looked like the overall sponsored CTR was tanking.

From that day on we have a cool name for such false alarms, and that is the “Anna Effect” 🙂

Cheers,

— amr

Recently I saw a number of analysts claiming that the Google/Adwords is analogous to eBay, and that positive network externalities will prevent competitors from ever dethroning Google, same way that eBay is protected today, i.e. the advertisers will always advertise on Google [only], in same way that the auctioneers only list their items with eBay.

That is simply not true, here is why:

1. eBay auctions are for a limited inventory of items, it is wrong for the auctioneer to list their item on more than one exchange since what will they do if it gets sold in all the auctions?

   This is not true for sponsored clicks, it is the opposite actually, the advertisers want to get as many [good] clicks from as many exchanges as they can.

2. Competitors were not able to dethrone eBay since they did indeed exhibit a strong positive feedback loop: the more buyers bidding on a product, the higher the auction closing price of that product, thus de-incentivizing the sellers from listing in the other marketplaces even if they had extra inventory (since the items would sell for less).

   The opposite effect happens for Adwords, the more the advertisers on Adwords, the higher the price they have to pay for each click, the more the incentive for them to look some where else to buy that click for cheaper (this is why Advertisers want Yahoo and MSN to survive).

Cheers,

— amr