Re: GoTo Policy Change

From: Steve Harrison <merlin_at_worthlink.net>
Date: Thu 22 Mar 2001 09:59:40 -0600

I'm coming down squarely in Mitch Jayne's camp on this
one. And am mildly puzzled at some of the responses to
his calling GoTo's "price increase" a "gouge."

PATRICK CARLSON <patrickcarlson_at_cfl.rr.com> WROTE:

>What online business would expend 50% of it's time
>on $.01 click Throughs? Goto as a publisher must
>consider the margins on this."

I must have missed the "50% of its time on $0.01 click
throughs" comment that Patrick is alluding to. In response,
I would suggest that the only human interaction time GoTo
is obliged to invest is at initial registration or if new
keywords are added (relevancy review). After that, most
$0.01 bids will go up (price increase) without any human
involvement at all on the part of GoTo. The "price
increase" aspect is fully automated.

More likely, the minimum nickel bid has to do with
weeding-out the kazillions of less profitable claims on
their database and server demands, if not a concession
to raw greed itself.

Brandi Jasmine adds [in part]: "...it strikes me as
rather ironic that here we are a lot of us bitching
that we can't sell ads for a decent price ... and yet
when someone comes up with a demand-driven model with
the price heading upwards it's called "gouging"."

Presuming the ads that can't be sold for a decent price
is a reference to banner ads, the irony would seem to be
GoTo's response to the popularity of pay-per-click listings
versus banner ads. It doesn't take much in math skills
for the small business web site owner to realize that
$0.01 to $0.04 click-thrus deliver a much higher ROI
than all but a very few well-placed and attractive banner
ads, even at a modest CPM. My skew comes from the viewpoint
of the small biz advertiser (some of my clients), not the
advertising vendor.

What seems odd is that, with Nathan Power's excellent
PayPerClickSearchEngines.com site now listing 72 PPC
engines on the scene, GoTo would decide to divest itself
of small business players. It's almost an analogy that
GoTo, surely recognizing the competition represented by
all the PPC upstarts, has decided to sell only Cadillacs
-- willing all the Ford and Chevvy sales by default to
the "junior" PPCs.

So be it. It just seems to be a ill-advised move on the
part of GoTo, a gaffe in favor of all the junior PPCs,
and a "get lost" message to the 80-90% of ecommerce
represented by small biz web sites who are obliged to
know the difference between a penny and a nickel per
click-thru. Those very advertisers who floated GoTo into
existence and acceptance in the first place.

After all, it's not like you can get into GoTo for a
penny -- you can get into GoTo for a $50 deposit into
escrow. Sure, GoTo doesn't actually get to fully claim
that deposit until it's used up by click-thrus (though it
is non-refundable), but where is that deposit sitting until
that time? The advertiser makes zero interest on it. Do you
suppose GoTo is holding those [surely] millions in deposits
in a non-interest-bearing account?

Unkind cuts stay sore for a long time, and in Internet
Time it doesn't take long for the word to get around that
a certain venue has become unfriendly. Web ventures that
don't realize the vitality of reputation, perception and
good will soon experience diminishing returns, or fade to
black.

Steve Harrison
Pay-Per Master
http://www.paypermaster.com
merlin_at_worthlink.net



Received on Thu Mar 22 2001 - 09:59:40 CST