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."
Those with existing bids of 5 cents or less will be allowed to keep them through September 1 of this year. However, any change in the bid amount will cause the bid to lose its protected "grandfathered" status. In other words, if you were in position 2 with a 1 cent bid and there was someone in position 1 with a 2 cent bid, you might wish to bid 3 cents to jump to the top. However, GoTo wouldn't allow this. Instead, you'd have to start off with a bid of at least 5 cents.
Grandfather status is not lost if you simply want to change a listing's title or description. Also, existing accounts are exempted from the $20 per month minimum spend through September 1.
With new accounts, if you don't spend at least $20 per month in clickthrough charges, then GoTo will charge the difference to meet the minimum spend. For example, say your clicks cost you $7.50 in a particular month. GoTo would then charge the difference, $12.50, so that you would be billed $20 in total. If your clicks cost $20 or above, then there are no additional charges. Also, if your account is inactive for an entire month (i.e., you don't have any active bids), there will be no minimum charge.
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."
GoTo also launched the concept of "Premium Listings" last month to help advertisers more easily identify the positions likely to bring them more traffic because they appear on many distribution partners. Premium Listings are simply the top three bids for any search term. They are said to get twice as many clicks as GoTo's other listings (4 and below), which isn't surprising given that these other listings don't appear in places such as AOL Search and AltaVista.
Finally, the UK service has debuted a UK-specific search term suggestion tool. It can be found from within the GoTo DirectTraffic Centre, off the Add Listings tab. You can also reach it directly via this URL: http://inventory.uk.goto.com/inventory/Search_Suggestion.jhtml. The tool shows top terms as derived from queries conducted on GoTo partner sites, such as Freeserve and Ask Jeeves UK.
FYI, the UK service has had a minimum bid of 5 pence per click (roughly 7.5 US cents) since it was launched at the end of last year. There is currently no minimum monthly spend, but given the US change, this could come in the future. Should that happen, then existing accounts at the UK service might be exempted from a monthly spend for several months as has happened with the US site.
To protect yourself, you might then consider opening an account at GoTo UK now, if you've already been considering this. There is a 10 pound account sign-up fee, but that has been waived through the end of this month.
Frequently Asked Questions for Advertisers
More information from GoTo on minimum bids and Premium Listings.
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.