We’ve known it was coming as Yahoo has been talking about it for a while now, but the new ranking model will be officially unleashed on February 5, 2007, according to Yahoo’s mass mail out news letter.

In the good old days things were very simple. If you wanted your ad to rank well, you simply bid more money than the next guy. That was it. This did cause the occasional bidding war for advertisers resulting in a skyrocketing per click price, but the concept was simple.

Following in Google’s footsteps, as of early next month, rankings will be determined by more than just your bid. Rankings will continue to be reflective of your bid amount, but only to a degree. Now they will also incorporate the ad quality which is determined by the historical click through rate (CTR) combined with a number of other algorithmic factors which examine items such as your actual ad copy and competitor’s ad copy. This combination of items will result in the “quality index” which will be used to help sort out the ads.

Of importance to note is how this will affect your cost per click charges. Historically you only paid one cent more than your next closest competitor. Under the new system you will pay one cent more than the amount required to hold your current position in the search results. (This is based on a combination of your bid amount and your quality index score). Ultimately increasing your quality index score can result in a lower cost per click while maintaining the same ranking position. There is now a greater chance that you could end up paying closer to your maximum bid, so be sure you are comfortable with whatever figures you enter. For more information on the effects of your maximum bid, visit Yahoo Search Marketing Help.