Re: GoTo Policy Change

From: Michael Martinez <Michael_at_xenite.org>
Date: Fri 23 Mar 2001 10:56:26 -0600

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. You can deal with it
>or take the Time to develop an effective affiliate
>program or develop an effective non-bidded search
>strategy.

TO WHICH MIKE GOLBY <mikeg_at_laragh.co.za> REPLIED:

>I agree. The anger, bewilderment, and sense of betrayal
>expressed by GoTo's supporters is not surprising given
>the engine's lack of prior notice of a relatively high
>baseline fee. However, GoTo must have done their homework
>on this one, factored in their likely losses, balanced
>it against the revenue they do and now expect to generate
>and share with their myriad partners, and decided that
>it was up to them as a dotcom to initiate their own
>'shakeout' of freeloaders and hypocrites - for that is
>what people who buy themselves position for as little
>as $0.01 are. What other mass medium will give you
>such a deal? None.

>The upshot is that GoTo's model works right now because
>so many support the notion of paying for position.

[big huge snip -- too many points to address]

>My ratings on Sprinks and other PPCs stand to take a
>beating come the flood of enraged penny-pinchers.

Goto's expenses appear to stem from its partnerships.
Allegedly, they are paying more than .01 per click in
referral fees to those partners, so they have to raise
the base click-through fee to ensure they are covering
their expenses. Unless Sprinks and other competitors
start lining up partners in a similar model, they have
no incentive to raise prices to .05 per click, although
they might (after September rolls around and Goto's
grandfathering fades away into sweet memory) raise
their prices to, say, .03 per click. Goto has
established an arbitrary minimum which reflects only
its own costs, not industry-wide costs. But the effect
may be the same as if everyone were incurring the same
costs.

Nonetheless, it remains to be seen whether this will
work for Goto. I got myself into paying for clicks
through a strange set of circumstances. I have a book
to sell, and am trying to sell it with Goto's help.
So, I stand a chance of getting my money back. But
I also took pity on some people who want to save a
television show (which I happen to like) and took out
two listings which I have promised to keep going
through the end of this month. And then my highest
expense comes from having to compete with a
non-commercial, non-profit "fan" site whose Webmaster
decided to get ahead of all his "competition" by
bidding on placement at Goto. I didn't notice what
he had done for several months because I have such
good placement on other engines.

In early April I'll see how much impact Goto has
had on my traffic. Normally they are a blip on the
radar screen but that's about it. I get most of my
traffic from services like Yahoo!, Google, Altavista,
Lycos, and others. All free listings.

The Yahoo!/Google steamroller is seriously threatening
to slaughter everyone, including Goto. Despite my
best efforts to maintain a diversified search s
ervice portfolio (for lack of a better term), I
find that Yahoo!/Google are producing about 1/3
of my overall search service referral traffic.
I can afford to do without Goto and all its
partners. Losing Yahoo!/Google would hurt and
hurt big.

People have been predicting for a long, long time
that we may end up with only three top dogs in the
field, and that the other services will go belly-up.
If that turns out to be true (and it will probably
be at least a year before we see another significant
failure, if all things stay as they are), then Yahoo!
and Google will be two of the winners. Everyone else
is jockeying for that number 3 position.

At this time, I would have to say that the front-
runners are NBCi, AOL, and MSN. They all have huge
backing and they are all growing their market share.
Altavista is still big (and they have huge backing)
but they are losing ground fast and their parent
company isn't doing so well right now, either. A
fading search engine might be just the bone to throw
to Wall Street.

In about six months we'll know whether Goto can pull
its fat out of the fire and finally turn a profit.

Michael Martinez
Science Fiction and Fantasy info_at_xenite.org
Visualizing Middle-earth, a book for all Tolkien fans
                               http://www.xenite.org/



Received on Fri Mar 23 2001 - 10:56:26 CST