I learned that come Q3 of this year, Yahoo! will change from a straight cost-per-click PPC ranking model to Google’s overly complex click-through-rate plus cost-per-click plus magical ranking algorithm ranking method. Basically, Y!SM will be switching from a transparent ranking model to a “black box” ranking model.

Now this, in itself, is not necessarily a bad thing. An AdWords like ranking model will help even the playing field, giving companies big and small a better chance to get good positioning in the sponsored listing results as long as they have some talent. This also gives all advertisers and incentive to write better ad copy, which is a fair way to increase click-through-rate.

I understand the business reason for this move up to this point – and I don’t have too much of a problem with it. However, the rest of the conversation with the Yahoo! rep really showed me that Yahoo! is really missing the point.

The first surprise was that Yahoo! has no plans to become more affiliate friendly. That means that affiliates of companies will continue to have to jump through hoops to have the “privilege” of working with Y!SM. What they fail to realize is that affiliates bidding on the “long-tail” keywords is one of the big advantages that Google has over them. Affiliates have to be more creative in their keyword selection, and therefore they bid on all of the less searched terms that big advertisers overlook. There are BIG dollars in the “long-tail” searched – and I am not sure why Yahoo! has such a hard time realizing this.

I know affiliates that spend a ton of money on PPC every month. They are legitimate businesses and Yahoo! needs to learn to treat them as such. Yes, there are crap Web sites out there they do not add value to a searchers experience, and they need not be included all of the time. It is the professional affiliate sites that can drive a lot of traffic that should be included. As long as Yahoo! continues to shun affiliate marketers, they will never make the “Google Money” they so desire.

The next surprise is that Yahoo! is trying to get into the branding business. They have looked at the traditional ad agencies and the millions they make off of expensive and ineffective branding campaigns and have decided that they need a piece of the action. How liberating would it be for Yahoo! to move outside of the performance based , ROI focused world of online marketers and into the big spend/big waste world of branding? You know Yahoo! executives love this idea. All you have to do is make some banners appear, give impression data, and viola! You are BRANDED! What bullshit.

I understand the concept of closing the sales loop. As more and more people turn to the Web to make buying decisions, online findability is becoming increasingly important. Big companies like Proctor and Gamble need to have a Web site that tells about their products, and they should run organic and paid search campaigns to make sure that when someone searches for Febreze, they do not run into www.febreze-kille-my-family.com at the top of the results. That just makes sense.

What I do not like is that Yahoo! wants to start getting into the pay-for-intangible-performance business. That just doesn’t sit well with me. But hey, greed is greed.

Overall, all of moves at Yahoo! draw me to one conclusion – Yahoo! has decided to throw in the towel when it comes to being remarkable. They have decided to adopt a revenue model that is a cross between their biggest and more successful competitor Google, and traditional ad agencies. They think that they have been beat. They can’t be the best. So now they will copy and stick to being second in whatever they do.

And that my fair readers, is balls.

Yahoo! is a great company that has loyal fans. They can find new and exciting ways of doing things. They can improve on their current business model and find better ways to operate. I guess what I mean to say is that there are talented people at Yahoo! who are capable of having original, remarkable ideas.

Someone just needs to remind the Yahoo! executives of that fact.