While I have been using Google ads on the blog for some time (and they do quite well), they don't yet do RSS ads outside of a more limited beta program. So I'm trying Yahoo's ads, also in beta but I'm on the list.

They just went live, and all that's showing right now is a generic ad, presumably until they spider the site and figure out what ads to run. Ideally it will be ads as relevant as Google Adsense does.

Competition between Google and Yahoo will be good for publishers. Just on basic click-rates, one will tend to do better than the other, presumably. If one is consistently doing not as well, they will lose all the partners, who will flock to the other. The only way to fix that will be to increase the percentage of the money they pay out, until they get to a real efficient market percentage they can't go above.

Read on for examination of the economics of RSS ads. Ad networks in the early days tended to take between 1/3 to 1/2 of ad revenue. Google's public statements indicate they are doing far better, at about 20-25%, though they don't reveal the specific percentage to their adsense network partners. A bold stroke by Google to not only put out the best network in terms of raw CPM but also to pay out a larger percentage of the money than the "standard." Normally only competition bumps that number.

In the end, they will compete on how well they can target ads, and who has the advertisers that are bidding the most. For ad buyers, one would like to see engines that tell them quickly where the best ad buys are, and I believe there are some tools like that but the search engines don't want efficient markets there. (In fact, they have been burned by providing even keyword suggestion engines, which get used by SEO spammers.)

Give these ads a day to stabilize and I would be interested in your thoughts. RSS ads are a bit of a kludge as RSS doesn't have an explicit mechanism for them. They have to be done as graphics rather than text. We may see ad blockers appear for the in RSS tools, though if the ads are on target and not obtrusive, there won't be as much call for that. If RSS had an advertising tag, then ads could be provided efficiently, but of course many readers would just decide not to display them. That would lead to the ad networks paying RSS readers a cut of their ad revenue through the reader to encourage the readers to display them. Of course if most readers weren't already free that could work, but it's a tougher slog when you can't be cheaper with the ads.

RSS is good, but some sites deliberately avoid RSS or cripple it because they don't get revenue from it. So if RSS advertising is accepted, that will be good for RSS, and good for feed generators too. The question is whether the ads get too annoying. One thing I already see as annoying is we get one ad per item. In a high-volume feed, that's probably too much.