Yahoo! Launches Paid Listings Service

Yahoo is seeking to augment its ad revenue by squeezing more money out of its directories — through a new pay-for-placement offering.

The services applies only to commercial sites in two categories — “Business and Economy/Shopping and Services” or “Business and Economy/Business to Business.” But those areas are the main commercial hubs for the Santa Clara, Calif.-based company’s directory listings, said Yahoo editor-in-chief Srinija Srinivasan.

Currently, about 265,000 sites are registered in the B2B area, and 369,000 are in the “Shopping and Services” directory.

A site listed in those categories and their subdirectories can pay a fee for what Yahoo is calling “enhanced placement,” which gives merchants a position above the directory’s normal list of sites.

Once the site pays a fee to Yahoo and is accepted by Yahoo’s directory editors, it appears in a separate box near the top of the page. The box shows several sponsored sites, and if there are more sponsored sites than there is room in the box, the site will be rotated equally, Yahoo said. Unlike such sponsorship opportunities offered on other search players, advertisers pay a flat fee for their ad to appear for a month, with the price being based on the popularity of the category — rather than a bidding system where advertisers who pay more have their listing placed higher.

For most e-tailers and B2B companies, fees for the service range from $25 to $300 per month, and the transaction can be conducted online. Higher-dollar categories — Srinivasan didn’t specify which these would be — are sold directly through Yahoo’s sales force.

Yahoo said the service wasn’t being packaged with advertising deals, but that some existing advertisers could be offered the service as a standalone product in the future.

Yahoo’s not the only portal/search engine experimenting with pay-for-placement listing to monetize their traffic beyond banner ads. Google, for one, has kicked off a number of such initiatives in recent months, offering both top-of-page paid listings and also less-expensive listing spaces flush right.

Srinivasan didn’t disclose how much Yahoo anticipated the sponsored directories to pay off, but she did say that the effort would improve users’ — and marketers’ — experience with the portal.

“I certainly hope this is something that adds to the robustness and richness of information that we can provide there,” she said. “And certainly the directory has served as great platform for businesses to reach their audiences.”

Though the changes might raise eyebrows among those who remember Yahoo’s home-brewed origins in Stanford University, Srinivasan compared the changes in Yahoo’s directory to accommodate paid listing to the evolution of the Web — as more commercial content became available, the directory also becomes more commercialized.

And this isn’t necessarily a bad thing: as with the yellow pages, paid placements help marketers differentiate themselves to potential consumers, she said.

“It has to do with the online evolution to make the online directory a truly useful product, and in my view, the most useful commercial directory includes commercial information,” Srinivasan said. “As the Web has become more and more of a pervasive medium, the commercial directory becomes a more and more useful set of listing.”