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This 43 message thread spans 2 pages: < < 43 ( 1 [2]     
I think there is a flaw in Overture's AutoBid Tool Logic
damageinc

10+ Year Member



 
Msg#: 891 posted 3:59 pm on Jun 26, 2002 (gmt 0)

I posted this on another site and found that it would be really helpful here.

I really cannot believe Overture offered something like this which is REALLY going to upset customers. There is a HUGE flaw in this new AutoBid system. This new system creates even more gaps when advertisers thought they would be eliminating them (major backlash could come)!!!

A simple example...

---

Advertiser A - AutoBid - Max Bid $1.00
Advertiser B - AutoBid - Max Bid $.99
Advertiser C - Bid $.05

A Will pay $1.00 CPC
B Will "only" pay $.06 CPC

In this example two things could happen

1. A never-ending auto bidding session between A and B going up to 1.00 and down to .06 in 1 cent increments for eternity.

OR

2. Advertiser A can just get stuck at their max bid (1.00) and advertiser B gets to laugh at them while at .06!

---

Now, this didn't make sense to me so I called up Overture and they confirmed that Advertiser A will get stuck and pay 1.00 (overpaying .93) because of the low bid below them. Advertiser A will be extremely pissed because he has thought the auto-bid feature would eliminate the bid gap but it actually CREATED a gap!!!

WOW - FOOLS GOLD!

In a month or two when everyone enables auto-bidding there will be TONS of bid gaps.

A more comprehensive example (all advertisers using auto-bid):

---

1. $6.50 (max bid = 6.50) -- GAP
2. 5.76 (max bid = 6.00)
3. 5.76 (max bid = 6.00)
4. 5.76 (max bid = 6.00)
5. 5.76 (max bid = 6.00) -- GAP
6. 5.51 (max bid = 5.75)
7. 5.51 (max bid = 5.75) -- GAP
8. 5.26 (max bid = 5.50) -- GAP
9. 3.76 (max bid = 5.25) -- GAP
10. 2.51 (max bid = 3.75)
11. 2.51 (max bid = 3.75) -- GAP
12. 2.01 (max bid = 2.50) -- GAP
13. 1.51 (max bid = 2.00) -- GAP
14. 1.01 (max bid = 1.50)
15. 1.00 (max bid = 1.00)

---

Wow!

 

Kevin

10+ Year Member



 
Msg#: 891 posted 11:57 am on Jul 1, 2002 (gmt 0)

Can someone tell me how to calculate what the next guy up is paying?
Seems to me the best policy is to stay on fixed at the moment.

redzone

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 891 posted 1:02 pm on Jul 1, 2002 (gmt 0)

Kevin,

If your bid is $.01 less than the next highest bidder, they are "always" paying the amount shown. :)

JayC

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 891 posted 2:26 am on Jul 2, 2002 (gmt 0)

damageinc:
A more comprehensive example (all advertisers using auto-bid):

---

1. $6.50 (max bid = 6.50) -- GAP
2. 5.76 (max bid = 6.00)
3. 5.76 (max bid = 6.00)
[...]
---

Is that right? Wouldn't the number one site actually be paying $6.01 -- one cent above the second site's maximum bid -- not $6.50?

WebGuerrilla

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 891 posted 2:54 am on Jul 2, 2002 (gmt 0)

Yes.

Regardless of what your Max Bid is, Your per click price will always be $0.01 more than the max bid beneath you.

I've been getting a real kick out of the new system. We used to get into a bidding war with a couple of competitors that would usually escalate up to $15.00 per click by the end of the day.

Even though we were willing to pay the top price, the back and forth nature of the old system meant that we still spent a good chunk of the out of the partner rotation.

Now, with the new system, big competitor sets his max bid at $15.00, we set ours at $14.99. Our average click price has been cut in half, and we spend the entire day at #2.

JayC

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 891 posted 3:17 am on Jul 2, 2002 (gmt 0)

In other words, for Kevin:
Can someone tell me how to calculate what the next guy up is paying?

The next guy up from you will be paying one cent more than your maximum bid. You'll be paying one cent more than the maximim bid of the next site below you.

JonnyWales

10+ Year Member



 
Msg#: 891 posted 12:13 pm on Jul 2, 2002 (gmt 0)

"The next guy up from you will be paying one cent more than your maximum bid. You'll be paying one cent more than the maximim bid of the next site below you."

But how do you know if he is using AutoBid, he may still be on Fixed ?

lgn



 
Msg#: 891 posted 3:26 pm on Jul 4, 2002 (gmt 0)

Autobid is good for Overture's Bottom line but bad for advertisers, especially after a bidding
war, between 4 contenders, and several contenders are using third party bidding software.

Normally, after the bidding war is over, the top three contenders will drop their bids to
eliminate the huge bid gap between position 3 and 4.

With Autobid, the third party bidding software only sees the maximun bid for the top
contenders. The #2 and #1 position can not drop their bid until the #3 position drops
their maximun bid, which is not going to happen as #3 is only paying 1 cent more than #4.

Therefore Autobid hinders the natural rise and fall of bids.

My sugestion. Go out and pay the $100 bucks or so for some third party bid management
software, some of them are now allowing 24 updates a day via a new XML interface, and
turn autobid off on all your listings, and encourage your competitors (anonymously)
to do the same.

Otherwise you are just lining Overture pockets with cash.

JayC

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 891 posted 4:11 pm on Jul 4, 2002 (gmt 0)

With Autobid, the third party bidding software only sees the maximun bid for the top
contenders.
[...]
Therefore Autobid hinders the natural rise and fall of bids.

It would seem, then, that it's not Autobid hindering the "natural" rise and fall of bids, but the inability of the bidding software to deal with Autobid that is the problem.

My sugestion. Go out and pay the $100 bucks or so for some third party bid management
software,

My suggestion: don't pay $100 for software that doesn't do the job. :)

PPCBT_guy

10+ Year Member



 
Msg#: 891 posted 8:33 pm on Jul 4, 2002 (gmt 0)

Most 3rd party management tools have been (or are being) updated to manage Overture's Autobid feature. In fact, you can set the 3rd party tools to update your maxbid all day just like the tools do for a fixed bid. That way your actual max bid is not revealed to your competition...

lgn



 
Msg#: 891 posted 9:43 pm on Jul 4, 2002 (gmt 0)

Yes, the third party tools treat the competition max bid as the current fix bid.
If everybody used bid management sofware, things would work.

The problem is, the people without these third party tools, uses autobid and sets
their maximun bid high, thinking nobody leap frogs them, and they stop
checking their bids for a week or so. This behaviour cause any positions
above them to pay a lot more.

When the competition drops out, they don't see it, and don't care. Their bid goes down, but not the competitor above it.
They are short sighted and does not see the
advantage of letting the bids drop for all in the top 3 when the chance comes.

The average price per click will not creep back up on the next bidding war, but will contine from where it was left off.

Autobidding is like playing poker where everybody must bet the maximun ante with every hand.
The game is short, not much fun, and Overture walks away with the pot every time.

Kevin

10+ Year Member



 
Msg#: 891 posted 9:28 pm on Jul 8, 2002 (gmt 0)

Thanks for your replies. But now having seen what is happening the example JayC gave is not correct (?)

No1 would pay 6.01
No2 would pay 5.76
and
No3 would pay 0.01 more than No4

Or have I got this wrong?

My comment at the moment is that this new system can be exploited.

The Internet marketing companies who don't understand it are like fish in a barrel. I still see competitors who are placing bids at 10.00 when there are only three players. It is now very easy to make them burn their budget.

Guess I agree with WebGuerrilla.

hurlimann

10+ Year Member



 
Msg#: 891 posted 10:24 pm on Jul 8, 2002 (gmt 0)

>Now, with the new system, big competitor sets his max bid at $15.00, we set ours at $14.99. Our average click price has been cut in half, and we spend the entire day at #2.

Only till we come along and bid 14.98 ;)

Now what happens?

JayC

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 891 posted 10:33 pm on Jul 8, 2002 (gmt 0)

Thanks for your replies. But now having seen what is happening the example JayC gave is not correct (?)
No1 would pay 6.01
No2 would pay 5.76
and
No3 would pay 0.01 more than No4

Kevin, if you read my whole post you'd see that it wasn't my example; I was quoting it from earlier in the thread. And pointing out, just as you were, that it is not correct. Number 1 would pay $6.01, not 6.50 as that example says it would.

So yes, you are correct.

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