Re: GoTo Policy Change

From: Kyle Yamnitz <Kyle_at_EdScope.com>
Date: Wed 11 Apr 2001 09:38:44 -0600

MIKE GOLBY <mikeg_at_laragh.co.za> WROTE:

>Kyle, is it not possible that GoTo have considered and
>accepted these things? In researching their soon-to-be-
>launched business model, they must have considered several
>factors. They have, after all is said and done, survived
>to 2001.

Yes, you're probably right. But they are eliminating
revenue at least from searches done on their own site
since they don't have to pay out anything there...

>First, they lop off penny bidders who, when found on
>partner sites, cost GoTo a lot more in distributed income
>than they're worth. Remember, if only 15% of penny bidders
>up their ante to $0.05, GoTo lose very little in income
>but they lose a lot of overhead.

Yes, I do understand this. It's an unfortunate reality
for sites like mine :(

>What's more, those
>$0.05 bidders are going to be serious spenders whose
>presence on partner sites is going to be far more valuable
>to GoTo and their partners than a host of small spenders.

True, but there's a lot more small businesses out there
than big ones... I understand their strategy, and maybe
it's a good one, but I don't think it's a good idea to
completely eliminate so many of their small business
customers. They may need that userbase further down the
road.

>Like it or not, the figures show that GoTo are becoming
>increasingly popular. More companies with more money are
>likely to sign up with the Big Yellow.

I'm sure they probably are. As the 5 cent min. kicks in
though, I think it's definitely possible that they become
less popular - fewer high quality sites like my own will
be listed. I realize that this can be argued both ways -
eliminating sites with content not entirely appropriate
to the keywords, yet bidding low to get extra traffic.

I don't think GoTo handled this well though. If it
isn't profitable for them to provide the top 3 listings
at 1 cent in the other search engines, then don't list
them! Instead, only list them if they are more than 5
cents! Then the 1 cent listings on GoTo would be
allowed to continue, and small business owners would have
the freedom to choose whether to pay 5 cents to be listed
in these other engines, or just continue paying 1 cent
to be listed on GoTo...

Also, calling this a "modest" price increase is just
plain silly. For those paying 1 cent, the price increase
is 5 times!

>If anything, it is these lowrent sites
>that have detracted from GoTo's credibility, have
>alienated serious searchers, and have spoilt the party
>for $0.01 bidders who were on to a deservedly good thing.
>I will certainly be happy when I regain my firt-page
>positions without having to pay for them.

I agree that there are a lot of not very applicable listings
at 1 cent, and GoTo needs to work harder to remove the
older ones (the newer ones seem to be screened better).
But, they are also losing a lot of 1 cent bidders that have
a lot to offer; a lot more than many of the 50 cent bidders
in many cases. I'm not disagreeing with you though...

>Like everything though, we'll just have to wait and see whether this
>particular bird
>is going to fly :-).

Yep, we never know what's going to happen! Take care,
        --Kyle Yamnitz
          EdScope, L.L.C.
          Expanding the Scope of Education:
                http://www.EdScope.com



Received on Wed Apr 11 2001 - 10:38:44 CDT