Yahoo! Search Marketing Pay Per Click Lowers Minimum Bid

Writing by Brick Marketing on Friday, 29 of February , 2008 at 2:03 pm

Yahoo! Search Marketing Pay Per Click has changed the way it handles minimum bids. Previously, minimum bids were set at .10. Period. Now, they’re based on quality and value.

In the next several weeks, we will start calculating a variable minimum bid for some of the keywords you’re bidding on. That means that sometimes the minimum bid may be lower than 10¢. Sometimes it may be higher. Content Match minimum bids currently will remain at 10¢.

That’s nice, and I’ll tell you why. The Yahoo! Search Marketing blog mentions that auction houses have a similar minimum bid system. It’s called a reserve bid. And it’s based on the minimum ascribed value of the merchandise being auctioned off. This reserve bid is based on certain factors like quality, fame, market dynamics, etc. If, for instance, a rare guitar model is valued at $10,000 because it no longer manufactured and was the guitar model of choice by a fair number of professional recording artists then that can be considered a good starting point. Take into consideration that a particular guitar of that certain model was once owned by Elvis Presley (hypothetically) then that raises the value. If it was a guitar that was owned by Elvis Presley and no one else then it could be even more valuable. If he’d only played that guitar once in concert then it’s value is raised again. And if he played only one song with that guitar EVER and that song was, say, “Jailhouse Rock” then that could raise the value again. Soon, we’re talking about a standard $10,000 guitar model going for $75,000 simply because of these quality and value factors.

Yahoo! Search Marketing is headed that direction with its search marketing minimum bids. That’s a good thing because it will increase the competition for certain keywords. It will also establish a market value for every keyword in existence, which means that certain keywords may actually lose value depending on the competition for those keywords. Since competition among advertisers for keywords is based on the demand value of those keywords at the search engines then whatever happens to be popular at the search engines - likely, most popular at Yahoo! - will have more value as an advertising keyword.

Seasonal concerns will play into this as well. For instance, the keyword “Easter egg” will be more valuable in March and April than in September and October. “Christmas tree” will be more valuable after Thanksgiving than in the summer. But other keywords, like “auto parts,” may be valuable year round and could be more valuable in certain markets than in others. And that’s what I like about this new plan - it gives the market more control over prices rather than the other way round.  It is definitely a change for their pay per click structure.

Category: Yahoo! Search Marketing

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