Yahoo Minimum Bids No Longer Fixed at $0.10

Paid Media / March 07, 2008

Amidst fending off Microsoft’s bid (no pun intended), Yahoo announced on their blog that “in the next several weeks” minimum reserve bids prices will no longer be fixed at $0.10. By eliminating fixed minimums on their quality based pricing model introduced last year, Yahoo is letting us know “they like quality”. Well Yahoo, we like quality too!

What does this mean?

This means that while Yahoo currently looks at the quality and relevancy of your ads by looking at your CTR vs your competitor’s on a keyword and rewards quality with higher rankings and lower costs, the new policy will allow advertisers to achieve a lower CPC than $0.10. Wow, that’s great news you say? Hold on, they’ll also try to determine for what they call the keyword “Value” by looking at how many advertisers are competing for that keyword and how much they’re willing to pay. If your keywords have a low quality or/and your bids don’t meet the minimum value – get ready to see some of your keywords become switched off (deactivated).

What should I do?

First thing, read up on the changes and Yahoo’s best practices. If you’re already focusing on increasing the relevancy of your ads and are maintaining optimized bids in your Yahoo campaign, the new changes should reward you. If you’re not, then expect to be forced to pay more to stay in the game or clean up your campaign. If you are affected negatively, the good news is that Yahoo provides grace period of a few days for you to raise your bid to keep the keyword active. You’ll be notified in the Dashboard via alerts and they plan to update the account interface to help track keyword status.

• Keep a close eye your top performing keywords – use the “watched keywords” feature to do this. If you can do this early, you’ll be able to quickly react to any minimum bid changes and minimize any negative impact
• Before simply increasing your bids because Yahoo tells you so, make sure it still remains within your acquisition targets and budget
• Above all, make sure you focus on relevancy and quality by having a well structured campaign and relevant ads.

Is this a good thing?

In short, yes. It will force advertisers to focus on quality ads and relevance that should improve user experience with Yahoo’s paid search results. We’re looking forward to seeing the impact of the changes. Let’s hope the implementation of this by Yahoo goes smoothly.