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Yahoo is overhauling its PPC ad model.

Beginning Feb. 5, Yahoo! Search ads will no longer be placed based on bid price but rather on relevancy, just as Google’s AdWords are. This will be good for the entire PPC market as it will make Yahoo! more competitive. Plus, it could lead PPC advertisers to focus on niche markets on both search engine platforms.

Niche marketing, especially online, has proven itself successful. Yahoo Search! ads could be a way for PPC advertisers to focus on those people who primarily use Yahoo! as their main search engine. Those people tend to be more casual users of the Net and people who have Yahoo! set as their home page. Google searchers tend to be more savvy searchers and more techie oriented. Search engine marketers, for instance, will likely use Google more often than Yahoo! A small business owner just making his way onto the Internet, however, may be more likely to use Yahoo!

We expect more studies to be made on who uses which search engine and how PPC can be targeted toward those specific niche searchers. This will be the year of increased PPC competition.

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