Found in The Register.
“When someone has a really high ad click probability, they’re very hard to beat, so it’s not a really competitive auction,” McAfee told The Reg. “So that they don’t just win [every auction], we do squashing. This makes the auction more competitive.
This, McAfee said, can increase Yahoo!’s revenues. “The bidders respond by bidding higher. The one who was destined to lose is now back in the race, so they bid higher trying to displace the number one, and the number one is trying to fend them off so they bid higher too.
“We can make the competition a bit more fierce using squashing, even on keywords where there’s not much bidding.”
Yahoo! is in the process of moving its search ad setup to Microsoft’s AdCenter system, and the move should be completed later this fall. McAfee said he did not know “for sure” if Microsoft uses an algorithm similar to Yahoo!’s squashing setup. We asked Microsoft if it’s using such algorithms, but it did not immediately respond.
When we specifically asked Google if it does something similar to squashing, it did not respond.
What are your views on this?