GoTo.com – Product Review

By Paul Lang, Editor, Sell It!
April 3rd, 1999

Product	GoTo.com
Description	Search engine with paid-for rankings
Available	Now
Pricing	Keywords bid on by advertisers

I’m sure that most readers will be aware that the “build it and they will come” attitude to Web site marketing is no longer true, if indeed it ever was. For although the number of Internet users continues to grow rapidly, so does the number of Web sites competing for their attention. And as a result attracting visitors to a Web site is becoming increasingly difficult.

Fortunately, there are many free methods for merchants with a limited budget to market their stores. The effectiveness of techniques such as posting to newsgroups and discussion lists or improving search engine rankings are well understood and employed by most savvy Web merchants.

However, there comes a point in the life cycle of most Web sites where the traffic being delivered through free marketing techniques is simply not enough, or requires too much time and effort to manage. For example, although search engines are free to submit to, the time needed to achieve and maintain high rankings on them can be prohibitive.

One solution to this problem is to invest in paid-for advertising. However, this can prove to be expensive and results can be disappointing. So where should you start?

Up until the middle of last year, I had not spent any money marketing the Sell It! Web site. However, I realized that I was going to have to invest in advertising if I was to achieve my targeted traffic levels. So I spent several months carefully examining the different ways I could spend my money before finally settling on running a trial with GoTo.com. I am very pleased with our results so far, with our average cost of acquiring visitors running at just under $0.05.

So what is GoTo.com and how does it work?

GoTo.com is simply a search engine with an important twist. Whereas with other search engines a complex and unknown algorithm calculates the search rankings, GoTo.com rankings are decided by how much money advertisers are willing to pay for them. Advertisers bid on keyword phrases and the more they bid the higher up the rankings their entry appears. Advertisers do not pay anything for the actual listing – they only pay the amount they bid if someone actually clicks through to their Web site.

Opening a GoTo.com account is done via a simple online form. Advertisers provide some basic information about themselves before selecting the keywords that they wish to bid on, the amount they wish to bid and the URL, title and description of the Web page they want to link to. An initial payment of at least $25 is required when opening an account. This is not a set up fee: the money is credited to the client’s account which is then debited each time their link is clicked on. Larger advertisers (i.e. those who wish to spend at least $500 per month) have an account representative assigned to them to help them manage their accounts.

The key factors to success with advertising on GoTo.com are choosing the right keywords and bidding the right price for them. Fortunately GoTo.com provides several tools to help with these decisions.

Choosing the keywords

It is important to select keywords that closely relate to the goods or services you are trying to sell. Some merchants might be tempted to try and attract a large number of visitors by bidding on a popular keyword that is unrelated to the content of their site. However, a member of GoTo.com’s editorial staff reviews each bid and inappropriate keyword bids are rejected.

A good starting point for keyword selection is to examine your server logs to find the keywords and phrases that people are already using to find your site via the traditional search engines.

GoTo.com also provides three tools to help you select keywords:

The Top 100 Search Terms page lists the keywords that are currently getting the most click-throughs.
The Unbidded Search Terms is a list of popular keywords that have no bids against them
The Search Term Suggestion List is a powerful tool that gives information on how many clicks a particular keyword phrase has received as well as suggesting some additional, related phrases.For example a search on “ski equipment” returns the following information:

Making Your Bid

As explained above, the more you bid the higher up the rankings your listing will appear. The importance of having a ranking near the top can not be over-emphasised, as the nearer the top your listing appears the more click-throughs you will receive. According to figures released by GoTo.com back in October ’98, here is the impact of having one of the top positions:

21% of people who click choose the number one listing

10% of those who click choose the #2 listing;

7% chose #3;

6% chose #4; and

5% chose #5.

Before making a bid, you first need to establish how much you are willing or able to pay to acquire a visitor to your store. It is important here to bear in mind the lifetime value of a customer, not just the value of the initial sale. Indeed, as a rule of thumb Web merchants should be prepared to spend all the profit from the initial sale in order to acquire a new customer, relying on repeat business to generate a return for them. So, if for example your average profit from a sale is $20 and 1% of your visitors make a purchase, the amount you should be willing to pay to acquire a visitor to your site is $0.20 ($20 x 0.01).

Here’s an important tip: It is easy to fall in to the trap of thinking of the maximum acquisition cost calculated above as being a ceiling for your bids. However, what is important is that your average acquisition cost remains below this level. Because you will be able to bid for some keywords for just a few cents each, you will therefore be able to bid for some other terms at a much higher price. For example, I have bid on some keywords at $0.35 yet have managed to keep my average acquisition cost below $0.05.

All bids need to be made in whole numbers – no fractions of cents are allowed – and the minimum bid is $0.01. If you perform any search on GoTo.com you will notice that below the paid-for listings there are a large number of listings with no price against them. These are not listings where the client has bid $0.00 – they are provided by a third party (Inktomi) and these free listings can not be applied for via GoTo.com.

In order to calculate how much to bid on a keyword phrase you first need to know what your competitors have bid. This is very easy to find out. All you do is run a search for your keywords in the GoTo.com search engine and against each listing you will see how much each advertiser has bid.

Continuing with our example, a search on “ski equipment” reveals that there are two paid-for bids, with the top one being $0.05. So a bid of $0.06 will be enough to secure the top ranking position.

1. Weather Equipment for Ski Resorts
Weather Stations, weather instruments and weather software for home or commercial use. The “Weather Picture”, most popular Ski resort lobby instrument. Wind, wind chill, Hi’s and Low’s
http://www.weathertools.com/ (Cost to advertiser: $0.05)

2. Where to Find Everything in Cincinnati
Cincinnati Sidewalk points you to places, people, businesses & services of all kinds in Cincinnati. Just click & see!
http://cincinnati.sidewalk.msn.com/ (Cost to advertiser: $0.01)

Choose Your Words Carefully

The final piece of the equation is the selection of the URL, Title and Description for your bid. Resist the temptation to simply enter the URL of your home page along with the contents of its TITLE and META Description tags. Careful selection of these fields will improve your results dramatically.

For the URL, choose a page whose contents closely relate to the keyword phrase you are bidding on. Visitors who click-through to your site and can immediately locate the information they are looking for are much more likely to stay and buy.

For the Title and Description fields, choose text that will encourage targeted visitors. Remember that unlike traditional search engines, the content of the Title and Description fields has no effect on the ranking of your listing so you can choose whatever words you wish. Use this as an opportunity to “pre-sell” to your visitors by explaining the benefits of your product or service.

Managing Your Account

One of the past drawbacks of the GoTo.com system has been the poor account management tools provided. However, these have improved significantly with the recent introduction of the DirectTraffic Center, a Web-based account management interface that currently has three functions:

It allows you to add more money in to your account
You can view online reports on how your keywords are performing
Existing keyword bids can be changed in real-time

More functions are expected to be added to the DirectTraffic Center over the coming months. In the meantime, all other account management functions need to be carried out via an online form or by submitting a completed Excel spreadsheet template. These changes then require to be reviewed by GoTo.com’s editorial staff and normally take three business days to be applied to your account.

Verdict: GoTo.com is an excellent, low cost way of driving targeted traffic to your Web site.

GoTo.com – Product Review

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