Overtures Goal to raise average CPC with Scam like Tactics

While it may seem like a neat concept for overture to offer the budget feature, I strongly believe it was developed to ultimately raise the average CPC at a faster rate. Since the feature was launched our average CPC has gone up over 50%. We have been using overture since before they went public and have spent over $500,000 with them over the years.

While the budget feature does not hurt clients that manually update bids on such a large scale, it is advertisers that use bid management software to help close gaps that suffer most. Since auto bid features such as bid jamming and gap closing are reducing the bid gaps it is only natural that Overture would develop a new feature that would combat that.

See my example below, any bid with (Ghost) is a listing that is over budget and no longer showing up in the live results. Many of these advertisers set budgets as low as $1 and therefore never show up

1 = 3.50 (Ghost)
2 = 1.70
3 = 1.10 (Ghost)
4 = 0.15
5 = 0.10

Now assume your listing is Position 5 at 0.10. Now if you set your bid software to place a listing at the top of the largest bid gap you would have the results below. This would leave you paying $1.71. If Overtures new budget feature was not in place you would be paying $0.16 because the largest gap would be between 1.70 and 0.15.

1 = 3.50 (Ghost)
2 = 3.49 (Your New Bid)
3 = 1.70
4 = 1.10 (Ghost)
5 = 0.15

Now take the same example with your bid software set to place you in position 3 and at the top of the gap. This again results in you paying extra, plus you will really be in position 2 instead of 3.

1 = 3.50 (Ghost)
2 = 1.70
3 = 1.69 (Your New Bid)
4 = 1.10 (Ghost)
5 = 0.15

As more and more advertisers become aware of this problem they can abuse the system and cost competitors lots of money. Also new advertisers are well know to overbid in the beginning until they figure out that they are not getting back what they expected. Instead of changing their bids, many will just lower budgets to a $1 as you can’t turn your budget off once you set it up. The only way is to either cancel your account or call overture. This means that the fastest and best way to turn off an account is to lower the budget to $1 or another small amount. This will result in more and more Ghost bids in the overture bidding system.

I have talked to various people at Overture and a few people will tell you that they are aware of this problem and may be working on a fix. However I was also told that the benefits far outweigh the downfalls and that it is unlikely that anything will change. They may however offer a fix to larger customers. That of course would leave out most people…

Overture (Yahoo) needs to do some serious thinking if it wants to keep its customers. We may be forced to abandon Overture completely and spend our money elsewhere, just like many have already done.