Feb 26, 2008 114 reads by Navneet Kaushal

Consider the case of an auction, Sotheby’s, eBay, normally there’s a reserve price (or minimum bid) set based on what is believed to be the minimum value of the product. Now, in congruence with the auction model, YSM is changing the way they set the minimum bids required to participate in a Sponsored Search keyword market.

In the next several weeks, Yahoo will start calculating a variable minimum bid for some of the keywords the advertisers are bidding on. Consequently, sometimes the minimum bid may be lower than 10¢. Sometimes it may be higher. While, the Content Match minimum bids currently will remain at 10¢.

Reportedly, these alterations are intended to help advertisers better align their minimum bids with the value and quality of their keywords. Furthermore, they are meant to improve the overall search user experience, in addition to enabling the advertisers to benefit from receiving better quality with lower entry points into keyword markets.

Setting the minimum bid on a keyword in Sponsored Search entails considering multiple factors, including:

Value: High quality generally means that advertiser's ads are being clicked more often, relative to their competitors. And that usually means that searchers are finding what they want more readily. So Yahoo tries to reward quality—first with higher rankings and lower costs, and now, potentially, with lower minimum bids.

Quality: Although assessing the value of a keyword can sometimes be complicated, Yahoo considers a number of things to determine its worth. For instance, the numbers of advertisers bidding on a keyword, and what they’re willing to pay for it. However, conversion data isn't utilized to determine minimum bids.

Here's the quick breakdown of how/when ads would be displayed with the new system in place:

A keyword becomes “active” or switched “on” in the system and eligible for display, when a bid is equal to or greater than the advertiser's minimum bid. On the other hand the keywords become inactive when the bid falls below the advertiser's minimum. In case the advertisers' bid is about to fall below their minimum, they would be notified in an alert on their Account Dashboard and they'd have a grace period of a few days to raise their bid to keep the keyword active.

The following are a couple of quick tips for the advertisers to best prepare for the upcoming changes:

  • Get to know your keywords
  • It is important to know which keywords work best for your business
  • Group relevant keywords together
  • Make the right bids and monitor
  • Use the Advanced match type to get broader exposure in search results
  • Maximize the quality of your ads
  • Quality plays an important role in how you get charged
  • Learn how to track your quality
  • Utilize ad testing with optimization
  • Group relevant keywords together in your ad groups
  • Continually monitor for any changes
  • Stay updated to the Account Interface

In order to facilitate the advertiser's bids management, there would be some enhancements featuring in the account interface. These include a new search and management tool that helps to find keywords that are below the minimum bid—bids too low for a keyword to become active—within a selected ad group or campaign.

You can learn more about the changes at YSM, and there's also FAQ section about the changes.

Of late Yahoo has come up with some advice for advertisers to maximize return on their marketing efforts. If you're an advertiser to get tips on keywords, see: YSM Tips: Use More Excluded Keywords For Relevance!, or to increase the conversion rate, see: Ten Ways To Convert Your Clicks. Although, the Valentine's Day is gone, for some great tips on marketing during festive seasons, see: YSM: 5 Fantastic Tips To Augment Online Sales This Valentine!. Lastly, it's quite possible that you get a surprisingly high number of clicks for your ads, either for right or for wrong reasons, don't panic, and learn what to do in such a case, see: Yahoo! Search Marketing Tips: What To Do When Faced With An Unexpected Click Activity?.

Navneet Kaushal

Navneet Kaushal

Navneet Kaushal is the founder and CEO of PageTraffic, an SEO Agency in India with offices in Chicago, Mumbai and London. A leading search strategist, Navneet helps clients maintain an edge in search engines and the online media. Navneet's expertise has established PageTraffic as one of the most awarded and successful search marketing agencies.
Navneet Kaushal
Navneet Kaushal
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