Overture, a leading provider of Pay-For-Performance search on the Internet, announced on February 7, 2003 that it will be “instituting a moderate price increase, raising the minimum bid from $0.05 to $0.10" effectively immediately. Thanks for the notice!
This sudden change will undoubtedly impact new advertisers as Overture has essentially raised its ante 100% for bidding on keywords based on positioning. Of course those advertisers bidding between $0.05 and $0.10 prior to the change will be grandfathered at that level; however, no bid adjustment may be made unless it is to at least $0.10.
Long gone are the days of minimum bids of $0.01 and those of us still lucky to have a few bids under $0.05 (because of a grandfather clause) will be losing them effective March 29, 2003. Because Overture “appreciates” our business it will be raising all grandfathered bids under $0.05 up to $0.05, which is up to a 500% increase.
On the other hand, Overture’s “overnight” change in bidding procedures will have no effect whatsoever on tens of thousands of advertisers who currently bid between $0.11 - $15.00+ per click.
Why the sudden change? Overture states that it is raising its minimum bids to offset the increased costs associated with securing long-term partners and “in the year ahead advertisers will see a number of innovative enhancements to the Overture service that will take your paid search program to a whole new level, allowing you to capture even more qualified leads from a wide range of affiliate partners.”
In a nutshell, Overture is notifying its advertisers that it needs to raise its minimum bids, by as little as 100% and as much as 500%, in order to partner with other affiliate partners. As you may know, Overture already partners with Yahoo!, MSN, Lycos, HotBot, AltaVista, Netscape, InfoSpace and CNET. What? Where’s Google and AOL? Don’t expect to find them on the partner list for a while, Google has its own AdWords program (which is also on AOL) and is doing just fine without Overture.
So, with Yahoo!, MSN, Google, AOL and the other major search engines already spoken for, what other affiliate(s) could Overture partner with to increase visibility and ROI enough to sustain such steep bid increases? With quarterly revenues exceeding $150 million, it’s hard to swallow that Overture has to “offset increased costs.”
Is Overture preparing for the inevitable day when Yahoo! is no longer one of its partners? Or is Overture “retaliating” because Yahoo! recently hired its vice president of search, Tim Cadogan, to fulfill the same role in its search unit? According to CBS.Marketwatch.com, Yahoo! and Microsoft combined made up 66% of Overture’s revenue last quarter. Furthermore, analysts speculate that Yahoo! might be exploring the creation of its own paid-search products.
If other search engines follow Google and Yahoo’s lead, it may be the end of Overture so ante up ...
Copyright © 2003 Andrew S. Hazen All Rights Reserved
*Andrew S. Hazen <andrew@PrimeVisibility.com> is the Founder and CEO of Prime Visibility™ LLC, a leading search engine optimization and Internet marketing firm dedicated to increasing qualified traffic to clients’ websites and developing e-marketing strategies.