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It is a long overdue move and one that could have been much bolder, but YSM have decreased the minimum required bid on many phrases down to 5p (from 10p). Competitive phrases remain at 10p.

Why this is good news

We have been holding back a number of clients from YSM (formerly Overture) for a bit as they can’t achieve the required return at 10p or over. Whilst those bidding pounds per click may be surprised to here this, there are markets that simply can’t sustain high click costs.

In addition many advertisers have areas of their keyword universe that don’t perform as well as their main phrases.

As such we are reviewing all client accounts to take advantage of this.

Why they should have gone further

  • A variable minimum bid is frustrating to advertisers. A simple across the board minimum bid is easier to manage.
  • If a term is competitive, there is no need to attempt to artificially keep the prices up. The market will do it automatically. An advertiser thinking they can usefully bid 5p on the phrase “mortgage” (click prices are usually several pounds) needs to ask serious questions about their business model.
  • There will be markets where five pence will be uneconomic. These advertisers are still going to be excluded after this move.
  • A huge proportion of advertisers don’t monitor their accounts in any detail, so the likelihood of significant loss of revenue as a result of existing advertisers reducing their bids is small.
  • YSM’s forthcoming Panama update will help YSM monitise the types of phrases where a reduced minimum bid may lead to reduced revenue.

So if we were running YSM, we would have decreased the minimum bid to 1p across the board. We did lobby them for this when they first muted a drop in bid last year. However we get what we get, so we’ll make the most it.

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