As promised Yahoo has now started changing it minimum bids on keywords within customers PPC accounts. They have said that the minimum bid changes were to improve the experience of their customers but in their explanation they compared it to an auction house setting minimum bids on items to insure that someone did not walk away with a valuable item at too low a price. With that example, it would appear to me that the main reason for the increase in minimum bids would be to increase the money that Yahoo makes from its advertising customers. From what I have seen most keywords remained the same and some increased a small amount (less than $0.10) per click and then some increased 2 to 4 times from the bids.  These last increase have made some of the keywords simply too expensive except for the advertisers with the larger budgets.

Now for a break-down of how Yahoo determined the increases. They based the minimum keyword bid amount on a number of factors with the main 2 being Quality and Value. The Quality part is really the only part that you can do anything about. The quality is basically a measure of the relevance of the keyword to your ad and the landing page. Of course there are some other factors that go into this such as keyword history and click through rate but the part for you to concentrate on will be the overall relevance of the keyword to the Ad and the Landing page. The other main item that Yahoo is basing the increase on is the keyword value and basically this is determined by the popularity of the keyword and the amount advertisers are willing to bid on the term.

We will have to wait and see if Yahoo makes any adjustments to this new way of setting minimum bids but until then the best thing to do is to concentrate on making you ad groups as small and similar as possible so that you can insure that the keyword, ad and landing page are as relevant as possible to help you control the only part of the process that you can.

Dwayne Clough
PPC Marketing Manager