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

See Also   The Insider Secrets to Marketing Your Business on the Internet   Alternative Payment Solutions   Fraud Prevention Tools   Top Tools to Help You Boost Customer Service   iV-Caller Verification Service   Make Your Price Sell!   FindWhat.com   Make Your Knowledge Sell!   HumanClick   Netship   iFulfill.com   Nexchange   Nothing But 'Net   Netwhistle.com   Bigstep.com   Make Your Site Sell!   AWeber   GoTo.com   Constant Contact   WebAdverts   PersonalStore   SiteInspector   LinkExchange   ClickTrade   Safe   eCHARGE   MilliCent

[This is the second part of a two part article. The first part can be read here].

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.