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GoTo Increases Prices, Appears At iWon

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The days of 1 cent clicks at GoTo's US service are gone, made extinct by a price increase put into place on March 1, which raised the minimum bid to 5 cents. A new $20 minimum charge per month has also been implemented. GoTo advertisers learned of the changes in an email sent to them on the day the price changes took effect.

"Over the last 2 quarters, we have signed a number of big traffic deals with premier web sites which has resulted in even more targeted traffic to your site. These traffic deals have increased our costs and as a result we're implementing a modest price increase," the letter from GoTo began.

Reaction to the changes at the Search Engines Forum discussion area was mostly negative, with only a few seeing the change as having no impact on them or being positive in some way. GoTo said it has received several hundred emails about the increases, almost all expressing displeasure at the raise in minimum bid price. In contrast, the $20 minimum monthly hasn't attracted great concern, the company said.

Higher prices and minimum spend amounts should generate more revenue for the service, assuming they make up for any losses from customers abandoning it due to the hikes. GoTo says that about 25 percent of its clicks are from 1 cent listings, so the potential for customer dissatisfaction is broad. However, as of last Friday, only one official loss was reported.

"We had one advertiser I'm told that pulled his business. My understanding is that he was spending less $5 per month," Ted Meisel, GoTo's president and CEO.

Ironically, losing that type of low-spending customer may actually generate revenue for GoTo by saving money. The service must review each listing submitted, to ensure that it meets minimum relevancy standards. It's under even more pressure to ensure that these listings are somehow related to bidded terms now that its listings are distributed to major partners such as AOL Search, the company says. The time to do this for the customer who spends $5 per month on 1 cent listings and $5,000 per month on $1 listings is the same.

"There's a certain minimum cost in serving a business," said Meisel. "We're not asking for a listing [setup” fee. We're just asking for you to spend a certain amount of money with GoTo."

In other GoTo news, its seven top paid listings are now appearing at iWon, another major search site. The deal hasn't yet been announced publicly, but the links can be found at iWon on the right-hand side of the screen, under the heading, "Partner Search Results."

A longer, more detailed version of this article is
available to Search Engine Watch members.
Click here to learn more about becoming a member


Frequently Asked Questions for Advertisers

More information from GoTo on minimum bids.

GoTo Price Increase
Search Engine Forums, March 1, 2001

Mostly negative reaction to the GoTo price hikes.

Paid Listing Search Engines
If you are after traffic, any type of traffic, for 5 cents or less, then some of the pay for placement services here are worth looking at. However, none of them have the distribution on major search engines to match what GoTo has. However, several of them are carried by meta search services.

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