Friday, April 18, 2008

Yahoo to eliminate 10 cent minimum keyword bid

Yahoo Search Marketing announced this week that it will eliminate its 10 cent minimum keyword bid for text-based ads in the United States. Depending on the ad quality and value, and possibly other factors, some minimum bids may be lower or higher than 10 cents, according to Yahoo. Kristen Wareham, director of corporate communications for Yahoo, said, “In general, the enhancements we have been introducing since early 2007 should collectively help reduce cost-per-click charges when the quality of ads is higher, or when we discount clicks from certain partners' sites.”

A concern is that Yahoo’s Panama search advertising platform is only about one year old. An additional layer of complexity may present problems for people who are presently having difficulties with it. Some anticipate that the low to mid level advertisers will be hit the hardest because of the change and the higher advertisers will have the budget to ride out any fluctuations. This will affect advertisers depending on their cost per action.

If the minimum bid drops lower than 10 cents for certain keywords, smaller advertisers will take advantage. In the long run, it has been noted, this could stimulate competition by increasing cost per clicks. If I was a small advertiser and if keywords dropped below ten cents, I would invest in them.

Thursday, April 3, 2008

Google’s Decelerating Clicks

In February, Google’s paid-click was a disappointment for both analysts and investors, as the company’s shares dropped 3.1%. Analysts reason that economic weakness may cause Google to fall short of Wall Street’s first-quarter estimates. Many also argue that the effort by Google to trim the number of clicks would enable it to increase the charges per click.

Google’s shares have fallen to $444.08, a per-share decrease of more than 40%, since hitting an all time high of $747.24 back in November. Many analysts believe that Google will bounce back in the second half. Credit Suisse analyst Heath Terry said, “With a strong lead in both technology and innovation, we believe the company has significant opportunities to drive revenue growth in the local, mail, display and video advertising markets despite the difficult economic environment.”

Last year Google made it more difficult for consumers to accidentally click on ads by focusing on reducing the number of clicks. Rob Sanderson of American Technology Research argued, “The reduction in Google’s paid clicks was largely the result of the company’s own quality-improvement campaign and that the decline would be offset by higher prices per click.”

When we discussed this article in class, we questioned if any of us would buy Google stock right now. If I had the money to invest right now, I would not purchase Google stock, simply because of the rapid decline of the share price, as well as the overall state of the economy right now.