Overture's Auto Bid feature can make a #1 position dangerous?

is overture lying to me?

[kara_b]

I read in a report from the San Jose Search Engine Strategies Conference the following comments and was wondering if anybody had anything to say on it.

"An advertiser's bid on Overture is lowered to only a penny higher than the advertiser below him. Except advertiser #1 pays his "max bid." He does not pay only a penny more than the advertiser below him, as one would expect."

The UK Directraffic centre tells me that on a number one bid, I am paying only 1p more than the number two position. Is there some difference between the us and uk overtures? Does someone know something I don't? Is Overture lying to me? Or is someone more confused than I am?

[wolfy]

I'm quite sure that for Overture US if you select Auto Bid you pay just 0.01 more than the competitor after you. I hope for my competitors it's still available if not they're paying a lot of money :)
Regarding Overture UK I don't really know how it works, I can suppose it's the same but I think you'd better contacting them directly.

[webdiversity]

Hi kara_b, welcome to Webmaster World!

If you use the Auto Bid facility then you will only ever pay 1p more than the advertiser below you.

What tends to happen though is that unscrupulous advertisers will push their own bids up to 1p below yours and use a fixed price, therefore you will be forced to pay the maximum bid to stay in the #1 position.

I haven't seen any stats, but I don't think Auto bidding is used by as many advertisers as you might think, and certainly in competitive and active industries I think using the auto bidding tool would be the same as leaving the shop open when you go out to lunch and someone comes in and steals the contents of the till.

Being #1 can be good in some instances, but in others the ROI will be less than being #2 or #3. You should experiment with your ads in different positions at different times of the day and over a period of time you'll see a pattern emerge of what is best for you.

Hope that helps.

[rhetor]

You can easily get cheated by Overture's auto bid feature.

What they say is that you pay one penny more than the next position's MAXIMUM bid, NOT actual bid.

If position #3's max bid is .06, and #2's max bid is $49.99 and your max bid is $50.00, then #2 will pay 1 cent more than #3's max bid or .07 cents, and you'll pay one penny more than #2's max bid or $50.00, since position #2's max bid is $49.99.

So here's how it will look:

$50.00
$00.07
$00.06

So beware Overture's auto bid feature.

Rhetor