While many users will be satisfied with getting free clickthroughs from the search engines, for some people (myself included), it pays to pay for traffic. There are many sources of paid traffic on the internet, including banner ads, newsletter sponsorships, and so on, but this article is devoted to three of the most "search-engine"ish sources, Google Adwords Select, Overture (formerly Goto.com) and (until recently) RealNames. I also comment on the new DirectHit sponsored listings and the many Overture clones - and the latest and potentially most revolutionary entry into this arena, Sponsored Links on Yahoo.

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Overture

Overture.com (formerly Goto.com) is simply a search engine where you can bid for the top positions for various search keywords. It cuts through all the "search engine position" baloney, and simply says "put your money where your mouth is."

The big news recently with Overture is their partnership with Yahoo which puts the top 3 Overture results for a keyword near the top of the page in Yahoo search results (positions 4&5 appear at the bottom of the page, and lower positions sometimes appear on subsequent pages). This will no doubt increase the traffic you get from them, but the usual positioning rules (see below) still apply.

Overture was originally the best deal on the net for paid clicks, but changes implemented by Overture have significantly reduced their value, and you now have to be much more selective in your use of their service.
Overture now charges a setup fee of $50 (applied against your charges, so you get it back), a minimum monthly fee of $20, and a minimum bid amount of 0.10 per click. Overture has developed a pattern of increasing their minimum bid amount.

I personally have no problems with the minimum monthly fee; if you're not spending more than $20 on Overture, you're probably not using it to your best advantage. It's the minimum bid that I find very shortsighted. I bid on hundreds of terms on Overture, and many of them are not worth 10 cents. In particular, there are several very general, very high-traffic search terms that generate a lot of clicks for me, even though my bid is only a cent or two, and even though my bid position is very low (in the 15-20 range). 20-25% of my Overture bill every month is a result of those bids.

Overture's major search engine partners only show the top 2 or 3 listings from Overture, so my low bids will never appear on them -- only on the main Overture site. Under the new policy, I'd have to remove all of those high-traffic, low-cost search term bids (current accounts are grandfathered, but the latest increase raises even the old bids to at least 5 cents). That's a total loss of income to Overture - even a penny or two is better than nothing.

If Overture is raising the minimum bid in order to satisfy their partners -- which I have nothing against, by the way, because any search term for which I'd want to be in the top 5 bids is going to be worth more than a few pennies -- then the correct way to do it is to simply require that the top 3 or 5 bids must be 10 cents or more. That way the partners get their money, the advertisers can still place low-cost, low-position bids on popular keywords, and Overture optimizes their income. But currently, Overture isn't doing this, so my advice on how to use them has to be based on their current rate structure, which is getting more and more advertiser unfriendly as time goes on.
Overall, I find Overture to be reasonably effective. For every $1 I spent with them, I typically got $3 in contributions from new users. Under their new pricing system (in particular as revised in the spring of 2003), I don't expect it to be that good, but still worthwhile. In the early days, before there was much competition for keywords, it was more like 10-15:1! Compared to banner ads, Overture tends to deliver much more targeted and valuable clickthroughs.

That said, given the recent rate changes, as well as the $20 a month minimum, I cannot advise that you being your experience with pay-per-click at Overture. My advice is that your first stop should be at Google Adwords (see bottom of the page for more). You'll spend less money, and be able to get a better (and cheaper) education in what works for you. If Google Adwords makes you money, then consider getting an Overture account.
Overture now has several Full Service Plans designed to help you get started. $99 or $199 gets you $50 worth of clicks, plus some hand-holding (the more you pay, the more you get) to help you determine what keywords to target. Of course, if you've read my page about keyword selection, you can save yourself $49.00 to $149.00. Send half to me (grin)!
How to use Overture

Rule #0: 3-4 word keywords attract buyers, 1-2 word keywords attract browsers. As much as possible, you want to target and bid on specific phrases. The more specific the phrase, the more likely it is that a click will convert into a sale. As I love to say, "It isn't the number of clicks you get, but the number of sales you make!", and this is particularly true when you're paying by the click.

I should give credit where credit is due: I came across this insight during my regular perusal of WebMasterWorld. It's a must-read if you're serious about web promotion.

Rule #1: don't be obsessed with getting the number 1 position on the search returns. It often isn't worth it. My rule of thumb is that the more specific the keyword, the higher I want to rank. For very specific keywords I want to be in the top 3, because then I'll appear in Overture partner sites like Yahoo. But for general, nonspecific keywords, I believe that positions 8-10 are more cost effective, because the first few listings will tend to "filter" the clickthroughs you get. After all, the more other listings the visitor passes up before getting to yours and then clicking on it, the more likely he is going to be interested in what your site is about. See rules #3 and #4 for amplifications on this.

Rule #2: monitor the effectiveness of your clickthroughs. You can have each of your search terms click through to a different URL if you want, and you can use this to track what search terms are actually generating income for you. Some search terms are worth only a few pennies, others might generate a dollar or more in income per click. Bid accordingly. Overture has a basic tutorial that demonstrates a couple of ways of making it easier to track the results of your search terms.
Under the new pricing system, it is imperative that you only bid on search terms that are specifically focused on your product or service. The more specific the keyword, the better it is likely to convert into a sale. Since you now have to pay at least 0.10 for a click, it is usually no longer worthwhile sponsoring general keywords. Do the research to figure out what specific search terms apply to you (read my preparing your pages for the search engines article for tips on how to do this; in particular, use the WordTracker service).

If you're a current Overture user who is grandfathered, plan now on what search terms you'll cancel when those terms start costing you 5 cents. Typically, you'll be getting rid of the low-cost, low-position, high-volume bids, but the only way to know for sure which bids are cost effective for you is to track your conversion results for each search term you're bidding on. If you're not doing this now, you should be.
Rule #3: If you are bidding on a keyword that isn't the prime focus of your site, my advice is, at first, simply bid enough to get on the first page of search returns. Later, once you know how much those clickthroughs are worth, you can raise your bid to get more clickthroughs, but note that often, the higher up on the page your link appears, the less valuable it becomes (because of the filter effect). Now that you have to pay at least 10 cents, you have to be much more picky about even thinking of sponsoring a general keyword!
For example, if you search for "yahoo" on Overture, you'll find that I have a link to my Yahoo tips page. I used to be bidding enough to get position 3, but found that dropping my bid to a mere 2 cents (position 6 at the time, now often not appearing since Overture's stopped showing the low bids) only slightly reduced the number of clickthroughs but increased the number of visitors who ended up being contributors - the filter effect in action. Even so, before the first round of price rises, I was considering dropping my bid to 1 cent, because the keyword isn't closely focused on what my site does, so my conversion rate from visitors to paying customers is much lower on this keyword than, for example, "register website." When Overture forces me to pay a nickel for this term, I'll not be bidding on it and Overture will be kissing $20 a month good-bye.
Rule #4: Consider bidding for one of the first 3 positions, but only on very specific, very focused search terms that are directly relevant to your site, but only if they are cheap. Overture is now providing paid search listings for Yahoo!, America Online, Netscape Search, Lycos, Hotbot and Altavista - but only the top listings will appear. Overture search results also appear on many of the major metasearch sites.

This promises to generate a large amount of traffic, but because each of these sites differs in how many Overture listings they display on their first page of results, the "let the top positions act as a filter" advice may not be the best approach because it means you won't appear on the other search engines, many of which get a LOT more traffic than the main Overture site.

My gut feeling here is that if you're currently in the #4-6 position for a very specific search term on Overture, and you can bump yourself to position 3 for less than a 25-30% jump in your bid, it's probably worth doing. But here's an important caveat; if you get outbid and drop to position 4, then you probably should reduce your bid to put yourself back into the position 6-8 range. Similarly, if you can get a #2 position cheaply, go for it.

Obviously, you should only do this on search terms that will only be searched for by people who are clearly interested in what you're offering, and like any other search term, you need to monitor how cost effective it is. You can't lose a penny on every click and hope to make it up on the volume!

Because the new search engines have much more traffic than Overture, less popular variants (and misspellings) of your keywords will become more important. Consider increasing the number of keywords you sponsor to cover the misspellings.

Wrapping it up

The whole point with pay-per-click is this: if the average visitor to your site generates 20 cents of profit for you (after counting all your costs!), and you can get the visitor for less than 20 cents, then you make money. So it's crucial that you be able to track your visitors and determine how much they are worth to you. For example, I know that the average visitor sent to me from Overture is worth 18 cents. My average cost per click is around 6 cents, so I'm making a nice profit on the investment. The new pricing system means you have to be more careful and monitor your clickthrough conversions more closely.

Other Overture-like services

There are tons of new services that use the Overture model; in order of traffic they generate, the most popular are FindWhat, Sprinks (sponsored links on About.com), Kanoodle, and Xuppa (formerly Bay9). None of them generate more than a small fraction of the traffic that Overture will, but FindWhat is probably worth looking at; it generates 10 times as much traffic as Kanoodle or Xuppa and has been agressively ramping up traffic recently. If you are spending $50 a month or more with Overture, FindWhat may be worth doing as well (they charge a $25 setup fee). Wondering why some of the sites don't have links? Read on!

Keep in mind that you need to track traffic from each of these search engines seperately, because the "quality" of their clicks varies. While the average visitor from Overture is worth 16 cents to me, the average FindWhat visitor generates only about 10.5 cents in income. Thus my bids on FindWhat are considerably lower than my equivalent Overture bids. Here are the current overall statistics on clickthroughs I've gotten from some of the major pay-per-click engines; as you can plainly see, the quality of some of them is abysmal and they should be avoided. At the present time, I can't recommend bids of more than 1 cent on any pay-per-click engines other than Overture and FindWhat -- and on Xuppa and NetFlip, I can't even recommend that! Espotting is a special case, they are a UK-based pay-per-click engine with relatively low traffic but decent results; you might consider them if your business is international in scope. Espotting is affiliated with Xuppa but generates much better results.

Whatever you do, avoid any pay-per-click service that pays surfers to click. The quality of the clicks is very low, and clickfraud is rampant.

Site% of clicks
that create account
% that send me
a contribution
Average click value
(in cents)
Overture 11.36% 0.89% 16.85
FindWhat 8.66% 0.61% 10.68
Espotting 11.62% 0.44% 9.45
Epilot (*) 6.66% ? ?
Kanoodle 4.25% 0.20% 4.05
Sprinks 8.71% 0.24% 3.92
Xuppa (Bay9) 2.18% 0.06% 0.63
NetFlip 0.50% ? ?


Note: While Epilot is generating decent account conversion rates, the traffic from this engine is so low (about 1 click a day) that after 2 months of sponsored listings, it is impossible to determine a conversion ratio.

Finally, some of these services have problems with click-fraud; people running robots to repeatedly click on links so as to drain your account. I have never had a problem with Overture in this regard, they seem to be very on the ball, but I have had some problems with some of the others. If you notice something and complain, you can almost always get a refund, but you have to notice, so keep careful logs of your clickthroughs from these services and scan them for suspicious activity (repeated clicks on the same link, repeated clicks from the same IP address, etc).

In particular, I cannot recommend Kanoodle. I just got hit with a blatant and obvious case of clickfraud, which drained my account of over $40.00 right after I added more money to it. What is particularly interesting about this case is that it was so blatant and obvious that even the most cursory anti-fraud detection on the part of Kanoodle should have caught it, so clearly they don't have any such thing installed. The fraud was on a keyword where I had a 1 cent bid and was in a low position! A deeply troubling event, compounded by the fact that Kanoodle took over a week to respond to my inquiry about this event, and then came back with a boilerplate reply that did not address the questions I posed. Other longtime selfpromotion.com users have had problems with Kanoodle.

Google's Adword Select

Adwords Select is Google's entry into the pay-per-click arena, but it is so different -- and unique -- that it deserves a section all on its own.

Adwords Select listings are small text ads that appear to the right of the main Google listings. Google makes it very clear these are advertisments.

Like other pay-per-click engines Google lets you decide how much you want to pay for a click. However, Google doesn't rank sites by how much they are willing to pay! Instead, they rank them by how much money they generate for Google!

Lets say you have an ad that generates a 2% Clickthrough Ratio (CTR). This means every time Google shows your ad 100 times, on average, 2 clicks result. And suppose you're willing to pay 50 cents for each click. The result is that, on average, Google earns 1 cent per showing (100 showings = 2 clicks = 100 cents of income).

Your competitor, on the other hand, is willing to pay 75 cents for a click. However, his ad only generates a 1% CTR, so if Google shows his ad 100 times, he'll get 1 click and Google gets 75 cents.

In Google's system, even though you are bidding less than your competitor, your ad will appear in a higher position, because it generates more money for Google. Even better, Google will automatically adjust the amount you pay down to the minimum amount needed to maintain your position.

This means that Google's system rewards those advertisers who can write good ad copy that attracts clicks, and that sponsor relevant keywords. In fact, if your CTR on a keyword drops below 0.5%, Google stops showing your ad. The whole system is very slick, and very much in the Google tradition of doing things very differently from the rest of the search engines.

Oh, and did I mention that Google charges a piddling $5.00 to open an account, and only charges you for your clicks after you get them? Such a deal.

As of the current writing (3/1/2003), I've been using Adwords for about a year, and my results have been modest but positive. It isn't the screaming bargain that Overture used to be (and alas, no longer is!), but it's making money for me. Also, I very much like the way the advertiser interface helps you optimize keywords and ad copy. If you're just starting out in pay-per-click, I'd use it to get my feet wet, and then, if you do well, use the knowledge gained from Google Adwords to effectively use Overture. And if you're already advertising on Overture, you should strongly consider giving them a try.

Andrew Goodman has written an excellent report on Adwords that raises some interesting points. It costs $49 but if you are a serious pay-per-click advertiser, it is probably worth the investment. You can find out more about it here. As always, commissions I receive on referrals are donated to charity.

RealNames

At first I had good things to say about RealNames. Then, as they changed their policies, I had bad things to say about them. But now I have nothing to say, because as of May 2002, they're going out of business.

DirectHit

DirectHit, which supplies search engine results to a lot of indexes and search engines, now has sponsored listings. However, unlike Overture, you bid on a "cost per thousand impressions" basis, with a minimum bid of $5.00 per thousand. So you pay every time your listing is shown to a visitor, not every time one clicks through to you.

My experience with DirectHit has been totally dismal and I do not recommend them at all. The average cost per clickthrough was about $1.00, 20 times the cost of a Overture clickthrough. Avoid them.

Yahoo Sponsored Listings

Yahoo has just started offering Sponsored Listings for between $25 to $300 a month, depending on category. 5 sponsored listings are displayed at the top of category pages (if more than 5 people buy sponsored listings, they rotate randomly). In order to get a sponsored listing, you must first get a normal listing in Yahoo, then you can apply for a sponsored listing in the category your listing is in. You can't use this to change your listing title or description, by the way; it just gets you "up top."

Is it worth it? My experience is that Yahoo Sponsored Listings totally suck! Not only are the clickthroughs dismal, but when I applied for a sponsored listing, Yahoo edited my current Yahoo listing and totally trashed it. Talk about adding insult to injury! Even worse, I have been trying to get a response from Yahoo on this, and so far, they haven't responded, even to my requests to cancel my sponsored listing.

Yahoo has also introduced "Most Popular" listings underneath the sponsored listings; so far it is unclear how a site becomes a Most Popular site.

Related Sites:

Overture has several PPC-related tools that are useful for finding the right keywords to bid on (and not just on Overture, research done there can broadly be used on other PPC engines).

PayPerClickSearchEngines.com is a good site that is full of information and links related to pay-per-click search engines.

Similarly, PayPerClickAnalyst.com is a well organized site, full of useful reviews of the various pay-pay-click sites.

CompareYourClicks.com is a nifty site that lets you see, in real-time, what it will cost to bid for particular keywords on a number of the major pay-per-click search engines.

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