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If You Don’t Check Your Yahoo! Minimum Bids Now, You’ll Hate Yourself LaterPosted by John on April 22, 2008 in Yahoo! Search Marketing |
Last Thursday and Friday, Yahoo! Search Marketing rolled out their new pricing structure. The gist of this update is that minimum bid prices will no longer be fixed at $0.10 and will instead be based on quality factors (similar to Google’s Quality Score). From a big picture view, this seems like a logical progression for YSM. However, many advertisers have expressed frustration with this change and its adverse effect on their bid prices. Today I’ll quickly recap what’s changed in your Yahoo! accounts, why you need to check your minimum bids and give you a few points to ponder.
The new minimum bids are a little bit like auction house reserve prices, and can be based on multiple factors, such as your keyword quality and the keyword’s value—or how much we think that keyword is worth.
Yahoo’s first step towards a quality based PPC platform was with the Quality Index system for ad texts. This gives your ad text a score based on how relevant your copy is in comparison to the ads that it competes with. But Yahoo’s push to institute quality based minimum bid prices is all new. Before, all keywords had a minimum bid of $0.10. Theoretically, you could still pay less than that based on relevancy, competition, etc., but $0.10 was the bottom line.
The new process follows the Google model and essentially enforces a sliding scale for minimum bid prices. Now, a keyword you previously bid $0.10 could have a minimum bid of $0.50 or higher depending on quality, value or how much Yahoo! thinks that it is worth. Yes, on the flip side, your minimum bid could go down. But I’ll get to that later.
What does all of this mean for you? If you haven’t been checking the alerts in your YSM accounts, or at the very least your email – you could have keywords labeled as “Pending Inactive, Bid Too Low.” Keywords with this label have been affected by the new pricing structure. If this is the case, Yahoo! will give you a grace period of “several days” to increase the bid accordingly. After the grace period has ended, your “Pending Inactive” keywords will be shut off until you adjust the bid.
Now that this new pricing structure has been in place for a few days, advertisers are beginning to react to the roll-out. As far as I can tell, the reaction has been negative. Yahoo! accounts that we manage here at PPC Hero have been affected too. In every instance, we have been asked to increase bids. For a few accounts the bids increased to the point where we became quite uncomfortable with the new price.
What really irks me is that Yahoo! isn’t being forthright with information on keywords where the minimum bid actually decreases! There’s currently no way of knowing when the min. bid decreases, thus telling us advertisers we can actually lower our bid due to our relevancy.
When you consider the initial reaction and even our preliminary thoughts on this update, it seems that Yahoo! is really fattening their revenue stream as opposed to increasing relevancy for the end users. To give this a rough test, I have placed a highly targeted keyword into an isolated ad group in one of my Yahoo! accounts. The keyword is the name of the website, the keyword is in the domain and the keyword is plastered all over the landing page. Not to mention it’s about as relevant as it gets. I’ve set the bid to $0.10 and I’m going to wait and see what happens. If I’m asked to increase the bid: a) I’m going to get angry and b) I’ll be pretty certain that Yahoo’s #1 goal is to increase revenue.
What are everyone else’s thoughts on Yahoo’s new minimum bid pricing structure?
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April 23rd, 2008 at 11:02 am
They said it couldn’t be done. They said that Yahoo had reached the top of annoying time wasting features that add nothing but time and take nothing but money. How foolish they were. On friday when I received the first notice on one of my clients, I checked in to my account to find over 50 keywords “pending inactive” because of quality scores. Now to be somewhat fair to Yahoo, some of these keywords are not immediately recogniseable as relevant by the standards they probably use. But after reconciling all those new minimum bids, I log in today to find 38 new pending inactives.
To me, the most irritating thing about their new minimum bid system is that it doesn’t use a tiered quality score minimum in the way that Google does. This means that based on the fluctuations of the market, if you set something to the minimum bid, the slightest variation can send your quality score down enough that your minimum bid goes up a penny and what do you know, you’ve got an inactive keyword again.
Good work, Yahoo!
April 25th, 2008 at 6:21 am
Thanks for the heads up. I checked all my clients with YSM and had no issues (Yet). Google is driving me crazy with one account on a couple of terms and we had to make a decision to either raise the bid or turn it off. Because the ROAS was so low and the cost was getting up there we turned it off. Some of the other terms we raised the bids because of the “branding” value.
As you said it is all about the $$$ but that is how the game is played.
Again, thanks for the update.
Terry
April 25th, 2008 at 10:50 am
Hi John,
Good article. Im very upset about Yahoo with their new politic. Im also very curious about how the results of your tests. How the results?
Wasabi
April 29th, 2008 at 9:32 am
@ Mack:
What really kills me is Yahoo’s admission that your bids could be based on “how much we think that keyword is worth.” Yikes!
@ Terry:
So far most of my accounts have been spared from wide spread bid hikes (guess I’m practicing what I preach!). A lot of people have been hit hard, though, and it makes one wonder how thin the line is between relevancy and greed?
@ Wasabi and all other readers:
My test has been spectacularly anti-climactic! My uber-targeted, super-relevant keyword is still chugging away at $0.10 bid! It’s only been a week, so I’ll keep any eye on my bid and let you guys know if it wavers.
May 6th, 2008 at 3:22 pm
ALL of my keywords are now inactive with minimum bids from .50 to 3.00 per click.So do they want to go out of business? Because I hadn’t been getting much from them this last six months anyway. This should drive the nail in their coffin.
May 29th, 2008 at 7:34 pm
This is so frustrating; I don’t know why they’re doing this. One of the arguments I’ve had with them is this. Since I’m an affiliate marketer, I can track the profit I’ve made on every keyword down to the penny. Also, I know exactly what position is profitable. A keyword might make me money in the 8th position, but lose me money in the 4th position.
I recently had to bid a keyword up by $.40; the average CPC for the first few clicks I received were at the new minimum bid amount, but as the quality of the keyword increased, the average CPC went down. When I called my Yahoo account rep, she really tried to sell me on this and kept telling me “Yeah, but as your quality goes up, your click cost will actually go below the new minimum”.
What I tried to explain to her, but she obviously didn’t get it is when I increased my bid price to the new minimum bid price, it made my position on the page go up by 4 positions. Now a keyword that was making me money at the #8 position is now losing me money at the #4 position and since I can’t decrease my bid price, I can’t get back to the #8 position by dropping my bid, I just have to hope other advertisers bid above me and push me back down.
I had another keyword with a click through rate of 5.13 and an ad quality score of 4 bars and they want me to increase my bid by more than $.40. This is ridiculous, if the new bidding is to increase the quality of keywords and increase keyword/ad text relevancy, then why was the minimum bid price increased on my highly relevant keyword and ad?
And when you call Yahoo to get some REAL answers, they have all their robot account reps programmed to say “There are a lot of factors involved” With an answer like that, they can get away with pretty much anything.
September 28th, 2008 at 3:28 am
>> @ Wasabi and all other readers:
>> My test has been spectacularly anti-climactic! My uber-targeted, super-relevant >> keyword is still chugging away at $0.10 bid! It’s only been a week, so I’ll keep
>> any eye on my bid and let you guys know if it wavers.
Hi John, Is your keyword still serving?
October 30th, 2008 at 9:43 pm
This Yahoo minimum bid is a total joke. I never get ANY traffic from them anyways…
October 30th, 2008 at 9:44 pm
PS to John, why do you have the nofollow tag if I may ask?
October 31st, 2008 at 6:01 am
@ Joomla,
While I am certainly edging closer and closer to the “minimum bid is a total joke” line of thinking, I certainly haven’t written Yahoo! off as a source of traffic and conversions. It all depends on your niche and putting Yahoo’s performance in perspective with your overall PPC efforts. But if you find that it simply doesn’t work, transfer your budget to those campaigns that DO work!
As for nofollow - this is a part of our efforts to ward off SPAM. We don’t want to give incentives for people to comment for the sake of receiving a link. We want honest, frank discussions! But rest assured, we have learned about SO many blogs and websites from our readers and their comments, and we do our best to link out to them within our posts each week.
Thanks for commenting!