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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...
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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!
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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):
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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)
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Wow!
BUT, to all you google fans/overture bashers listening, it is the exact same bidding functionality that Google employs! The only difference is that you have a little more control over your bids @ Overture!!!!
I am concerned that people think they are getting a great deal when in reality bid gaps will still exist - most people just won't know it!
This new system opens up the playing field for new strategies.
i also don't like that it only bids up 1 cent, because if everyone in your category is also using AutoBid, then it'll just be a continuous upswing cycle - costing everyone more money in the end - I'd like the ability to choose a 1, 2 or 3 cent gap.
one thing that could make this problem more manageable perhaps is separating higher and lower cost KW's into categories, then setting your lower bids to Auto, and maintaining higher ones still manually (if it's manageable or necessary) to make sure you're not overspending.
i understand it's meant to work more like google, but it's definitely a challenge in its own right.
There isn't a continual .01 upswing due to Autobid. There is a large upswing, because the Autobid goes up to your competitor's MaxBid and bids .01 above that.
So, you won't see bids looking like:
1.03
1.02
1.01
1.00
Instead you will see:
2.51
2.50
1.01
1.00
because of the autobid system goes to the advertisers maxbid and bids .01 above that.
Here's what we saw today with one of our customers: A competitor has set their max at $50 on many key phrases. If we in turn do the same ($50 is the max allowed) and so does the site at position 3, where does all of this go? At what point will we actually be paying $50 per click? I see Overture making big bucks fast with this new method!
As it is, now that all max bids are revealed, all we are doing is upping the max bids all day, not much different than changing fixed bids. Actually it is: the bids are going up much faster! We went through our average budget - that had strecthed 5 days in the past - in 3 hours today!
This is looking much like an over-valued internet IPO stock. A bid of $1.00 that would have gotten you first place yesterday is not possible today.
If Overture posted actual PPC prices rather than max bids, this may level the playing field.
Wow, this is a bunch of bologna! All of a sudden, my competitors are in control of how much I pay!
PPCBT_guy: Is there a way of deducing how much the bids are on Google's AdWords Select? I have never played around with it. But, you are correct, they have the same basic functionality going on, but they hide the Max bids.
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!!!
In your example, it's not creating the gap, it's shifting it. Without autobidding, there would be a 94 cent gap between positions 2 and 3; with autobidding, there's 94 cent gap between positions 1 and 2.
The advertiser in the top slot pays a dollar/click in either scenario. He's not paying a dollar because of system, he's paying a dollar because the second advertiser is willing to pay 99 cents.
I'm not an Overture fan (or even an Overture user), but I don't think this is as bad as you think it is. Nobody pays more in the second scenario, and one advertiser pays less. Also, this kind of weirdness will only happen in scenarios where the top bidders are bidding way out of proportion to the lower bidders (which probably means they can afford it, or they're crazy), so it may be too rare an occurance to worry about.
Real Time Auctions where the auctioneer tells the one side what the other is willing to pay. LOL :)
But i have to say that $50 max bid idea is definitely scary.
And in reality they look at the new Overture search page and see their bid already at the max at $5 and their competitor at $4.99 and think it is a competitive market. But in reality the new Overture search page is showing their competitor's MAX BID and they don't realize/understand that is not what they are actually paying. Their competitor's max bid may be $4.99 but they are only paying 1.01 because the third place bidder is at 1.00!
carylf said it best "As it is, now that all max bids are revealed, all we are doing is upping the max bids all day, not much different than changing fixed bids"
Setting a high MaxBid and thinking the autobid feature will save you from overpaying is a very false assumption. A high MaxBid will leave you sceceptible to competitors forcing bid gaps on you.
I guess advertisers will have even more of a reason to outsource ppc management to firms or software.
In your example, it's not creating the gap, it's shifting it. Without autobidding, there would be a 94 cent gap between positions 2 and 3; with autobidding, there's 94 cent gap between positions 1 and 2.
This new system is certainly creating bid gaps. Let me show you a simple example:
Before the AutoBid system (what advertisers are actually paying):
1.$1.03 - Advertiser A
2. 1.02 - Advertiser B
3. 1.01 - Advertiser C
4. 1.00 - Advertiser D
NOW, with the autobid system (what advertisers are actually paying):
1.$2.50 - Advertiser A
2. 1.02 - Advertiser B
3. 1.01 - Advertiser C
4. 1.00 - Advertiser D
Because Advertiser A thought the new AutoBid system was great, he showed his cards and put in his MaxBid at 2.50. Advertiser B saw this and put in his MaxBid at 2.49 (knowing he would only be paying 1 cent above the person below him - 1.02).
This gap was clearly created with this new system.
[edited by: damageinc at 12:37 am (utc) on June 27, 2002]
It's forcing you to pay more, only because the guy beneath you WOULD pay more. But as the higher bidder, you are the one sticking your neck out....while the guy under you enjoys his much cheaper price, and settles for a ranking one step lower.
I mean I have some keywords that if bumped up $0.05 can end up costing me $100 more a day, just because it moves me into the top 3 "Premium" listings, which are displayed to a lot more users via the partnered search engines.
Now, my 3rd party bidding service suggests using both them and Autobid. So now I have two tools to do one job. And not only that, but I'm going to have to pay closer attention to each of them to make sure I'm not getting screwed.
Maybe it will just take some getting used to. But I think I will let those guys with all the money play in the mud for a while, and see what happens to them.
This new AutoBid system from Overture eliminates the common bid gap but creates a whole new one. So, the third party tools/services are important to
- get you that desired position
- eliminate these new bid gaps
- and hide your hand (max bid price).
[edited by: damageinc at 12:50 am (utc) on June 27, 2002]
I noticed that logging in to the manager is taking a whole lot longer now too. I assume everyone is watching to see what happens to their max's.
I wasn't sure I fully understood how it all worked until I read the scenarios here. Hmm, so that 49.99 bid is sounding interesting...
Note: they just posted the system will be down for maintenance 10pm PT.
And being #1 is extremely risky now.
You're right! For many phrases we hang at 3 happily paying .15 a click while 1 & 2 battle it out at $1.00 and up.
It is frustrating to know that you almost don't have a chance at #1 because Overture has decided to show your hand before the dealer has finished dealing the cards - and the #1 spot has maxed the bidding at $50.
Equally annoying is those bargain prices at #2 & 3 have abruptly disappeared under the new system.
We have the situation where us and our competitors sit in a position in 1-3 with a good ROI and a very
efficient business model. Along comes some hick with no clue about ROI and tries to be in the top 3.
And a bidding war erupts until the pretender to the throne gives up.
The one cent tit-for-tat that the bid management software does for us drags out the entire process.
A high maximun bid, sends the message 'go away and don't even try to compete with us. We have the
resources to crush you'
The only problem as it is now, the number 4 spot can force you to pay your maximun bid, by bidding their
maximun bid, one cent below you.
My sugestion for Overture. Use proper gap management, and have your position always one cent above the
next lower position. Your bid will be automatically updated one cent above the next guy
(up to your maximun bid) whenever the next lower person raises there bid. Updating can be done
6 -24 times a day if you do not wish to show your maximum bid. If you wish to show
your maximun bid, they must bid above your maximun bid to obtain your position.
Overture could charge a small position protection insurance (1 to 2 cent premium) for this feature.
For those who do not wish to show their hand. The display maximun bid feature can be turned on or off.
Please make comments to the Post, not to me personally. I already get enough email.
Really? Within Overture or a 3rd party manager?
I checked through Overture and there's nothing that I could find. That would make a whole lot more sense than the current situation.
Most of all, I see outrageous bidding wars that I'll bet have been tripped by the new feature. Words that were relativle y stable in price for several months have actually doubled this week.
I guess it could have also been a glitch that would have fixed itself, but I really didn't want to take a chance at $4.99 a click.
Oh my god is this new system SLOW !!! took me forever to look through my listings. I used to use the bid amount search to sort out the important keywords. Is this gone ? Before the update, I would simply search for all bids higher than .06. I only have about 20 keywords above .06, but I have several hundred at .05 or lower that I never change. Is this still possible with the new system ??
[added] I think if you assign a category to your key listings you can filter by category. it will probably take another 15 minutes of waiting for pages to load before I can be sure, though...:([/added]
Thanks, I'll give it a try. I haven't tried experimenting too much, since it just takes forever to try anything. I sure hope they find a way to speed things up. If my site were that slow, I'm sure I would lose TONS of customers.
For a lot of the lower value keywords (the ones that may generate a handful of clicks for 5-50 cents) it can be quite time consuming managing the bidding for those.
This auto bid facility will be useful for auto managing bids up to say 50 cents and reducing the number of manual alterations that need to be done on a daily basis.
But as nice as it will be there will still be the opportunity for companies to go through a chunk of change quick.
At least with Google the max bid is $15....for now.
By the way, at 9 Pm Central the site seemed to be working normally. Hopefully that will continue!
