March 1, 2001 was a sad day for small business and non-profit websites. I'm talking about the great number of websites that rely on pay-per-click advertising at GoTo.com in order to effectively spread their message to a highly targeted market. GoTo came out with a letter to all of their advertisers that stated that their new monthly minimum would be $20 per month. Now that's not a huge issue as most of the GoTo advertisers likely spend much more than that. The really sad item in their letter was a rate increase of the minimum bid. It is being raised from 1 cent per listing to a minimum of 5 cents per keyword listing. This is a huge 500% increase that seems to be without merit. I received a letter from Amber Summers at GoTo in response to my inquiry. She said that GoTo has not had a rate increase since GoTo began over 3 years ago, and the rate increase was due to the increased cost to GoTo for delivering traffic to their advertisers.

To say that they haven't had a rate increase is a bit absurd. Every single time an advertiser is added to a keyword, it seems like the rate is going up. This of course is because the new advertiser is trying to be at the top, and thus raising the rate for the next person who wants to be at the top. However, let's look at the more important part of the reply. Summers said there was "increased cost" to GoTo for delivering traffic. To me that means that setting these premium listings with all of these other search engines has likely proven to be very expensive for GoTo.

If you had an account prior to March 1 with bids of less than 5 cents, those listings will remain at their current rate until September 1 as long as you don't make any changes to the rate to those particular keywords. Making any price changes - say from 1 cent to 3 cents - will be impossible unless you raise your bid to 5 cents. If you try to raise it from 1 to 3, it doesn't work on the system. So it's "next stop, 5 cents." Ouch!

Alternatives
It would seem to me that if GoTo wanted to increase the amount of revenue they received in order to cover cost and even create profit, they could have found a better way. For instance, GoTo could have implemented a plan so that if you had a $100 monthly minimum that your minimum bid would be 1 cent per keyword per click, if you had a $50 minimum then you could have a 2 cent minimum bid, etc. This would allow GoTo to better service its higher-paying advertisers and keep revenues up without having to artificially increase the value of a minimum bid. Obviously if the minimum bid is 5 cents, then in order to be competitive advertisers are going to have to bid much more than that. Will it be worth it?

Another possible revenue increase GoTo could have done without causing the little guys to flee would be to have set the minimum "premium listing" to 5 cents or so. Yes, you could still bid 2 cents to be listed with GoTo, but in order to be in the top 3 and distributed across their network of premium listings, you would need a minimum of 5 cents or so - which of course would be worth it because those listings are being used all over the web at places like AOL Search, HotBot, and Lycos.

Even if GoTo had instituted a 2 cent minimum listing, then that would have been a bit more understandable; you would be talking about a 100% increase with no added value given to the advertiser. But since it's the "first rate increase" in 3 years, it would probably have been quite a bit easier to digest than a minimum of 5 cents per listing.

Background
But aren't most of the keywords bids over 5 cents anyway? Granted, the most popular keywords are of course over 5 cents however there are thousands, if not hundreds of thousands, of less popular words and phrases that still attract quite a bit of attention. The smartest GoTo advertisers have worked hard to develop strategies to use a wider variety of keyword combinations in order to stay away from overbid keywords. For instance, you may be advertising a business that specializes in travel. However, the top bid for travel is about 80 cents per keyword per click, and in the summer it is often much higher. Unless you're making quite a bit of money selling travel packages all over the U.S. and even the world, having a very generic term cost you 80 cents per click may not be the best strategy. However, if you have hundreds of keywords that specialize and target a certain type of travel, a certain location of travel, a certain time period of travel, then your minimum bid may indeed be less than 5 cents for a great deal of your keywords. Up until a few days ago at least. Right now, if you wanted to advertise "Missouri vacation," then you could be ranked in the #1 position for less than a nickel. Add that to hundreds of other keyword phrases such as "Branson Missouri Vacation" and "Kansas City Missouri Vacation" then you're talking about quite a bit of traffic for only a few pennies per visitor. Why would GoTo want to cut into this powerful technique, which has become increasingly popular with advertisers due to the consistent ROI it can deliver?

Perceived value
Another thing that GoTo could have done would have been to more effectively explain the added value to us as advertisers. Sure we're getting more traffic, but what about ways to target that traffic better, what about better tools for reporting, better notification regarding our placement for bids? Take a look at these tools and see how GoTo could have thought ahead and given us a bit more perceived value for advertising dollar.

Tools
I advise all of my clients to use a keyword bid optimizer. (Several companies now offer these.) Basically what it does is this: It takes all of the keywords that you enter, and displays them on one page for you. Then it reports your position for each keyword, showing you the bids that surround each keyword. From that you're able to determine where the gaps are, where the opportunities are, and where you are compared to where you could be listed. In addition to all of that, I get email notifications that tell me when I can lower my bid, yet still retain the same placement, and when I have any change in the keyword position.

It's like having someone working for you checking out all of 100 keyword listings every day just to be sure you’re not wasting money or missing opportunities. Why didn't GoTo come up with this as an added value to advertising with them? Aren't there other tools that they could add? How about the ability to track which search engines we are getting traffic from through GoTo? How many dogpile.com hits am I getting? How many AOL Search results? How many Lycos folks?

Call to Action
So what can we do? Well the first thing I know to do is to simply let GoTo know how you feel. Call them and email them and tell them how much you're spending every month and why you use their service, and let them know that 5 cents a bid is unacceptable to you - if indeed it is. Let them know your situation and how you're small business or non-profit service is served by GoTo and how a 500% increase changes your ability to use GoTo as a vehicle. You can email clientservices@GoTo.com or call their toll free phone number at 1-877-999-4686.

It's time for the little guys and the non-profits to pull together and make a difference. We don't have the strong arm of the advertisers that spend thousands of dollars a month, but as thousands of individual advertisers who spend much more than that collectively, maybe we can show GoTo that perhaps a compromise could be made. Perhaps they could take our input and grow.

I've always believed that the success of GoTo is in part from the success of the advertisers. It was our excitement over the pay per click method that really got the word out to the end users. It was our cash that helped make the way and our input that has helped them develop the system to what it is today. Let's remind them that the little guys are still out there and that we’re the dot com's that are not failing today. Yes, while the big boys are floundering, I've seen quite a few independent dot com businesses flourish over the past 24 months and I believe it's due to sound business plans and to the vast amount of marketing and advertising opportunities that are available to us. Let's help GoTo succeed by reminding them that we are here as a positive asset to their company.