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1. Non-profits who could maybe afford a 1 or 2 center will now stop using GoTo and start using alternatives. GoTo will become more focussed as a shopping directory/commercial directory. Focus is not a bad thing, perhaps good.
2.What a poor justification saying that the price increases are due to adding all the new partners. GoTo advertisers pay for every click. The more parners GoTo have who create more exposure the more clicks and the more clients pay anyway. This is doublespeak of the worst kind.
I wonder what partners will continue in the long term to use the GoTo database as it becomes more and more likely to deliver fairly boring, commercial listings? Or will partners start producing their own PPC models and boot GoTo off? AV seems a possible likely candidate
I believe that pushing up the lower end of the bid prices will actually serve to increase the amount required to be in the top, even after factoring in a loss of some customers.
The sad thing is that they will probably wind up making more, even though their results are worse.
Hello Nadeem,
We're sorry to hear that you're unhappy about our recent price increase.
We value your business and do not want to lose you as an advertiser.
While we recognize that the $0.05 minimum bid and the minimum monthly
spend requirements are new to our business model, we continue to believe
that GoTo is still the best, most cost-effective way to promote your site
on the Web.
Please keep in mind that unless you decide to change any of your current
bids or add new terms, these new policies do not apply to your account
until September 1, 2001. You have 6 months to rethink your GoTo
advertising campaign strategy.
This is the first price increase that GoTo has ever introduced,
implemented in order to maintain the high level of traffic that we provide
to our advertisers. Partnerships that make programs such as Premium
Listings possible cost us money, and the price increase is a calculated
move which will help us to continue meeting these costs and enter into new
partnerships which are even more beneficial to our clients.
Please do not hesitate to contact us if we can be of any further
assistance.
Sincerely,
Carlene Crowe
GoTo's justification is "Partnerships that make programs such as Premium
Listings possible cost us money, and the price increase is a calculated
move which will help us to continue meeting these costs and enter into new
partnerships which are even more beneficial to our clients."
That's a load of rubbish. Every click-through from AOL, AV and the others earns money, so by virtue of these agreements with the big search engines, GoTo's income is going to increase rapidly. Hence they're are, as a previous webmaster said, using 'doublespeak'... trying to have it both ways. They didn't make those agreements with AOL and the others out of charity; they did it help their own bottom line and to continue enjoying their enormous dot-com salaries.
Now that they are paying partners part of the click revenue, there is even less left to cover costs. That's all the more reason to require a higher minimum bid.
I really don't begrudge them this shot at profitability. They're doing what they need to do, and I will work on the things I can influence, like conversion rates and my own clients' profitability.
The crux of the matter is that their whole model is a ruthless juggernaut leading to the rich at the top and the poor at the bottom. Quality? Relevancy? Totally irrelevant to the GoTo 'deepest pocket first' approach.
One of the many unpalatable factors about this increase is that it prefectly illustrates this attitude.. money first whatever it does to the rankings... to hell with the small investor.
By all means turn a blind eye to all this (by the way, this phrase originates from a one-eyed fellow called Admiral Nelson - don't confuse him with me!), but the bottom line is that GoTo promote a practise which is bad for virtually everyone on the net except for themselves.
$50M to AOL? So what? They chose to pay that. And what has this to do with anything anyway... I don't understand why some people try so very hard to find an excuse for Greed/GoTo Inc. They are acting purely for money... to make as much as possible with NO regard for anything else.
That's the bottom line. An obnoxious model run by an organization which makes no attempt whatsover to mitigate it to support the smaller player.
I think some of the GoTo doubletalk revealed by some of the contributors above speaks volumes about them.
Yes they chose to pay, and chose to pass those payments on to the client (just like every single business in the world). Alta Vista ran very relevant results and spidered for free. Didn't make any money on that. This is the crux. Define the purpose of the search engines and it is to turn a return on the stockholders investment. Define your purpose, it should be to return results for your clients (or yourself). Is GOTO a tool that does this for you at a reasonable cost? If yes, then you use it and adjust your strategy accordingly. If no, then you invest your time/money else where. All the sniveling about "greed" is not going to change the basic economic fact, GOTO needs to make money. Sorry if the Net no longer is a utopia that will better the world but it is largely a forum to promote business (same as football games, TV, Radio, Newspapers, Magazine, etc etc etc etc). IMHO.
I don't think so!
The GoTo model stinks... NOT just because it is based upon pure greed, but because it distorts the purpose of search engines - to return the most relevant results.
"Sorry if the Net no longer is a utopia..":- well for me the net should be as good a place as we can make it.... and it is a LOT better if search returns to be based upon something other than wealth.
And I'm not "sniveling" about it. I'm just arguing the facts. Whatever the situation, whenever there is a wrong and a right, there are always those who will argue the just cause. Sadly there are always those apologists who will shrug their shoulders and argue some sad pathetic line of inevitability.
The just cause may not always prevail... but I know which side I always try to take.
It is surprising how many people will come back to the line that the brutal juggernaut must continue, presumably in the name of unfettered capitalism. It doesn't have to be like that. Sometimes, the good of the larger entity itself (in this case the net) must be a factor. The Goto model ignores this - ignores the small guy, ignores the wishes of the searchers to get results based upon relevancy and not wealth.
I have a feeling that ultimately the small guy in this case will win through, and that GoTo will get exactly what it deserves.
I know that I cannot influence GOTO except by taking my money somewhere else. I try to focus on the portions of this business that I can control. Across the Net, I've seen programs that were set up for smaller guys to get into advertising disappear as larger minimum dollar amounts are set. I feel this is inevitable.
I don't know that the general public has enough knowledge of search engines to realize the choices. Grab a person off of the street at random, and ask him to list all of the search engines he knows. You'll probaly get the 3 he's seen commercials for.
my .02 oops make that .05 now :)
The Yellow Pages have a similar quality. You are automatically in the white pages, but you pay extra to be in the Yellow Pages, and you also pay more for prominence in those pages.
Strictly speaking, the Yellow Pages is a "phone book"; but it's really a marketing service built on phone book technology.
THANK YOU
>Should we not be discussing methods to improve our own sites' profitability rather than condemning GoTo's attempts to do the same thing?
Yes, that is a nice idea. Anyone willing to start in that direction please open another thread.
My point is that no matter where the click comes from, GoTo customers still pay the same amount per click. It increases revenue for GoTo and increases costs for advertisers, though it also increases exposure for both.
I still don't see that as justification for the price increase as the customer is being billed both ways. On the other hand, GoTo has the right to charge whatever they want, and let the market place decide. I certainly dont see a 400% advantage from the perspective of 1c bidders from these new tie ups. Better that they had just not used this justification at all.
My view remains the same. GoTo is focussing on commercial and shopping areas. It must be good for their unit service cost having new minimums and will get rid of their loss making accounts. PPC was never a good model for non-revenue generating sites anyway. And focus and specialisation, as ive said for a long time, is the future of search services...
My .05
As such, it is not the model most people who value the net as something other than a big-multinational channel want to see.
It directly attacks the concept that good quality and relevant sites should see the light of day because of these qualities.
It directly attacks the concept that the small player can compete with the big budget.
Yes, it stinks (IMHO). But yes, there are still going to be apologists who try to see the world through Greed Inc's eyes and justify this vile model.
I accept that, and everyone is welcome to an opinion... but as I argued above, no matter how the debate is twisted to try to justify GoTo and their policies, the fundamental facts about the nature of what they are selling remains. Sorry... I don't subscribe to the 'anything goes, no matter how damaging to anyone else because all that matters is profit' approach.
Some people seem to, but I and many others don't. Sure, I might be a small cog with little or no influence, but that is never a reason for accepting a wrong and not arguing with a straight bat.
On using this model, if it makes anyone money and they want to use it then fine, it's obviously up to them. But being aware of the nature of the model and where it could lead is simply informed choice.
My choice is not to use it unless I really have to (especially with the ridiculously large increase, which perhaps demonstrates further their disregard for small players). Others may/will differ.
I think GOTO is going to be very surprised how many people can't afford the new price increase. Based on lower conversions and 5 time the cost a lot of people are going to jump ship. Wonder how much of their revenue comes from the 1 to 4 cent bidder?
All GOTO ever had to do to give themselves a pay raise was promote their service to increase their traffic. Build a loyal base of users - promote - promote- promote
So many of the .com sinkings are coming from making 9th hour dumb decisions - like bitting the hand that feeds you!
Instead of delivering more high quality traffic, where everybody wins, they are just raising the price where nobody wins.
And the .com crystal ball says...
-s-
Good point! Maybe we should boycott them and then the FREE Inktomi rankings will move further and further up the listings :)
Thank you GoTo.
Anytime the discussion of search engines moving to some type of fee-based system comes up, there is always a fairly large passionate segment of the web community that shares Napolean's point of view. While I'll fully admit that I sit on the free-market side of the fence, I still am very interested in hearing all opinions on the subject. Unfortunately, I have rarely seen the discussion ever evolve to one that talks about a new solution.
If in fact GoTo's current cost per click works out to be $.04 yet a good portion of there advertisers are only paying $.01 per click, what would you suggest be done to correct that type of loss? What type of system would it take to preserve low cost bids for the little guys, while at the same time allowing GoTo to come close to fulfilling their promises to their investors?
Would those advertisers who will be most effected by GoTo's new policies be willing to pay some type of annual subscription fee in order to retain the ability to bid under $.05? Maybe a system similar to some credit card or checking accounts where your annual fees are waived if you maintain a certain balance?
Would those that use GoTo regularly be willing to pay some type of subscription fee in order to help offset the losses involved with providing low bid options to small businesses? Maybe something along the line of a magazine or newspaper subscription model?
If passing any of the costs on to advertisers or users is completely out of the question, then what steps do you think GoTo should take to bring their operating costs down to a point where they are no longer losing money from supporting the small business market? Should they eliminate their human review policy and replace it with some type of automated system? If so, how would it work? How would you control spam and make sure the quality of your results did not suffer? Should they ditch their Toll Free tech support and implement some type of email only policy?
If it isn't possible for companies like GoTo to ever make a profit serving the small business market, what solutions are left? Third party intervention? Should companies like GoTo be forced to operate a portion of their business at a loss for "the good of the web?" If so, who would be given the responsibility of enforcing such a policy?
The bottom line is that there are significant capital costs involved with developing a search service that can attract enough users to be of benefit to anyone seeking exposure for their web site. I certainly hope that someone will eventually come up with a system that works for everyone, but at the moment, I don't see any models that will satisfy all sides.
Ultimately, I think there is a good chance GoTo will fail, but I also think that they have come the closest to developing the type of system that gives the little guy a decent opportunity to bring quality traffic at a reasonable price. It would be a shame to see them disappear without any benefit coming from their existence.
GOTO was and will remain very smart money for us, that is until september, when the best we will be able to do is break even...
We spend a few hundred dollars with them every month as I'm sure thousands of people do.
I think they are banking on people like me staying with them, but since my profit will go from some to none, there's not even a remote chance of that happening. I wonder if they have thought about where they will make that revenue up from.
Again - if GOTO spent their time and money finding ways to deliver more and better traffic their click-throughs would go up and as a result so would their profit potential.
I really hate to see them go under...
-s-
There is absolutely NO WAY that I can afford to raise my bid price, and certainly not by 4 cents.
While I will really hate to do so, I fear goto has left me no (acceptable) choice but to cease use of their service effective Sept. 1
What a shame.
-ebess-
