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 two of the most "search-engine"ish sources, Overture (formerly Goto.com) and 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) stil apply.

Overture was until recently the best deal on the net for paid clicks, but recent changes implemented by Overture have significantly reduced their value, and you now have to be much more selective in your use of their service.
The changes at Overture are that they are requiring a minimum monthly fee of $20, and a minimum bid amount of 0.05 per click. Overture has been very vague about why they are doing this, but my suspicions are that the minimum fee is being set to eliminate small customers who aren't generating enough income for them to warrant servicing their accounts, and the minimum bid has been implemented so they can guarantee their major search engine partners (like Altavista, and more recently, Yahoo!) of a minimum amount of income per click.

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 5 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 indefinitely, as long as you don't change your bid, but if this changes, the bids will come down). 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 at least 5 cents -- then the correct way to do it is to simply require that the top 3 or 5 bids must be 5 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.
In the past, I've found Overture to be incredibly effective. For every $1 I spent with them, I typically got $3 in contributions from new users. Under their new pricing system, 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. Even under the new system, if you are serious about selling something, you should give them a try.
Overture now has a Full Service Plan designed to help you get started. $149 gets you $50 worth of clicks, plus some hand-holding 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. Send half to me (grin)!
How to use Overture

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.
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 0.05 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/if the grandfathering stops. 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 5 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, position 15 or so now) 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, 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 grandfathering ends, I'll not be bidding on the Yahoo term 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 10 cents of profit for you (after counting all your costs!), and you can get the visitor for less than 10 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 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 Bay9 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. 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 Bay9 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 Bay9 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
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.



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

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.

RealNames

RealNames used to be a cost effective way of generating clickthroughs. However, recent changes at RealNames have made it only marginally useful and I can no longer recommend it.

First of all, in the past searches on various search engines that use RealNames that partially matched your RealName would find you. However, RealNames current policy is to encourage search engines to only list exact RealNames matches; they want RealNames to be similar to AOL Keywords.

Secondly, you used to be able to register a long keyword (with more chances for a partial match). However, I'm informed that new keywords are being limited to 3 words only, and existing long keywords are not being renewed (they are sold on a yearly basis).

Finally, Realnames can, if they want, charge you extra if your $100 a year keyword generates more than 1000 visits (which comes out to 10 cents a visit). And if they issue you a keyword and later decide that it's too "generic" they can cancel it without refund.

For these reasons, I don't think RealNames are nearly as useful as they used to be. If you have a very specific website that precisely matches a high-traffic keyword, then you might consider them. However, for most of the people who use SelfPromotion.com, they aren't worth it.

You can find out more about RealNames at their website.

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.

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