Re: GoTo Policy Change

From: Steve Harrison <merlin_at_worthlink.net>
Date: Fri 23 Mar 2001 11:06:47 -0600

Well, I thought I'd said my piece and was done with
this topic until reading Mike Golby's
<mikeg_at_laragh.co.za> broadside in defense of GoTo, and
in derision of most small biz web ventures at large.

It's a rare (and hopefully vanishing) breed of economic
sensibility that would deride as a "squalling bunch of
two-faced penny-pinchers, freeloaders and hypocrites"
those who are so crass as to try and compete at
e-commerce on scant or out-of-pocket advertising
budgets. From such arrogance, one might get the
impression that Mr. Golby believes the myth that all
dot-coms are obesely funded by giddy venture capital
outfits and are rolling in advertising bucks. Get real,
Mr. Golby, et al who labor under that naive perception.

All reaction to disparaging comments aside, what one
can reasonably afford to bid in the PPCs is largely
about the profit margin of what is being sold. Barring
deep pockets or a sugar daddy investor infusing capital
into a small biz venture, and for the sake of a
hypothetical which probably represents the character
of more e-commerce web sites than does Mr. Golby's
apparent model, let's say that the advertising budget
is funded by profits. Bizarre concept, eh?

Mr. Golby's sig block indicates a relationship with
Laragh Courseware <http://www.laragh.com>. I visited
that excellent web site and checked: a) the products
being sold, and b) pricing. The products are
(apparently) software or programming that has
(apparently) been developed by Laragh Courseware.
The least costly item for sale goes for $69.00
(single user license).

Let's compare that to a hypothetical Mom-n-Pop web
site where "widgets" are being sold for $9.95 each.
Neither Mom nor Pop make these widgets, they are
purchased at wholesale for resale at a mark-up. Their
profit margin is thin.

Presuming Laragh created its own material (or paid
a programmer), the overhead per item sold would
surely be minimal, especially compared to Mom-n-Pop
who must purchase inventory at wholesale. The profit
margin available to Laragh, as a type, would seem
considerably larger than that available to Mom-n-Pop.
Perhaps this disparity is the basis for Mr. Golby's
skewed perception of economic realities for most of
web commerce. The difference between a nickel and
a penny can loom large for the small player,
especially in a compounding situation as represented
by PPC click-thrus. Should that suggest some sort
of illegitimacy of small biz competitors? Mike Golby
seems to be suggesting exactly that.

Mr. Golby also bluntly insinuates that only the
well-funded have any right to participate/compete
in PPC bidding. And any right to squawk about policy.
I sincerely hope that the Internet does not evolve
according to his perceptions. One thing that seems
reasonably certain is that his call-to-arms to
boycott all paid-visitor advertising venues will go
nowhere. PPCs and pay-per listing resources seem to
be here to stay, in one form or another, as are
hopefully the free-listing search engines and
directories. They all figure into a well-rounded
marketing plan.

Summary: GoTo simply has to be a money-maker in the
extreme. Price their banner ads. Consider that it
takes a $50 deposit to set-up an account (regardless
of how long that might last, depleted by click-thrus).
Consider the compounded revenues generated by GoTo
listings getting clicked-on in "partner" web sites,
portals, meta engines, etc. (the sooner an advertiser
account will need re-funded). What's THEIR overhead?
If you can't afford to buy-out Disney, don't ask your
advertisers to foot the bill.

Despite the rationalizations and insults issued by
Mr. Golby and other shills, moles and conflicted
individuals (GoTo operatives?) who may try to justify
GoTo's nickel minimum bid and account maintenance fee
in this forum, I'll still agree with others and
contend that it's an outright gouge. And a play to
rid themselves (their database) of those very
bothersome cheap-seat and bleacher bum advertisers
who buoyed GoTo into prominence from the beginning.
Shameless greed in the raw.

I will certainly be pulling-out my small biz clients
by way of cancelling their automatic deposit
functions in GoTo, and when the escrow pool runs dry,
that's it. No new clients brought aboard in GoTo,
even if they could afford the nickel minimum. Under
that sort of management, another gouge or unkind cut
would probably come around again.

With the compounding of listing exposures other
"junior" PPCs are now beginning to enjoy, their
penny (or under-a-nickel) bids are delivering a much
higher ROI. Small biz owners who manage their own
advertising budgets and don't know the difference
between a nickel and a penny are surely destined
for failure. That may strike some "business
juveniles" as being despicably tight-wadish, but
it's the real world.

BTW, I, too, once advocated Sprinks as an attractive
PPC engine, as did Mike Golby in his dyspeptic
catharsis. But they just recently took an unfriendly
turn by now requiring a $100 minimum deposit to
establish an account. Scratch Sprinks.

Steve Harrison, Prez
Web Merlin Marketing
http://www.bidness.com/merlin
merlin_at_worthlink.net



Received on Fri Mar 23 2001 - 11:06:47 CST