I have a couple of projects in the works, one of which is an advertising outlet for webhosting companies. I imagine given the choice between cost-per-impression and cost-per-click, an advertiser will almost always prefer the latter. My question is, how much is a "click" worth to you under the following conditions:

* text links
* link appears on one site only (unlike overture.com)
* targeted traffic (webmasters in search of webhosting)
* comparison shoppers (multiple webhosting links)
* flood prevention (site ignores multiple clicks from the same user in a certain time frame)

A penny? Nickel? Dime or quarter? A BUCK?

PS. I left out "nothing" in the poll, as I'm mostly interested in the opinions of those who have or would consider CPC.

I've recently spend $ 100.- on a pay per click advertising campaign with overture.
Basically what they do is put you on top of the major search engines for as long as you have money in your account and each time someone clicks on your listing you pay.

I bid $ 1.50 per click. The major players payed as much as $ 4.98 per click (dellhost)

Seeing how I convert about 10% of all visitors into customers that would mean almost $ 50.- advertising cost per new customer. Fine if you have $ 20.- per month hosting plans, but not if you are going for the low-range hosting plans.

Also, I was not particulary impressed by the results :(

Most of the web hosting clients we've had have been willing to pay between $0.15 and $0.20 per click for banner ads, and closer to $0.30-35 per click for newsletter ads.

How much is a click worth to you?
Depends where the click is coming from

It depends on your business model.

I'm starting up a domain registration business. My profits are low. I will be depending on a completely automated registration and customer support model - where completely means no more than 5% of all customers need any assistance by a support team member - and hopefully they only need this one time, and continue to renew their domain through us with no support costs annually.

With a gross profit of less than $5 per domain sale, how much is a "click-through" worth for me? Very little.

If you figure that targetted click-thoughs are going to result in one sale per 100 clicks (and that's high based on market study results that I've recently purchased), and that advertising cannot be more than 20% of gross profits, that means a single click-through is worth about a penny to me - assuming I'm not getting any play in other ad campaigns at the same time.

-t

Well, I suspected the consensus would be "depends", as there are a lot of factors involved in determining the viability of an advertising campaign. It appears publishers will always be excluding some group when setting their advertising prices.

I was still hoping, however, that we could agree upon a CPC amount that's reasonable, regardless of whether the amount fits within your current budget. For example, say HostSearch was to change there showcase advertising policy. What do you think would be a reasonable amount for them to charge CPC?

If signup ratios are indeed hovering around the 1/100 mark, I'd think that $0.25/click ($25/client) would be a reasonable place to start.

If hostsearch did change its advertising policy, why should it charge less than overture?

When the top 3 bids on overture are above $5.00 per click for the term "web hosting" surely the rates charged for a targeted spotlight or banner should be even greater.

There are more than 50 companies willing to pay $1.00 or more on overture, so I'd use that as your minimum level.

Surely, the value of a click will find its own level. Setting a minimum bid at $1.00 is ludicrous. Set it at a competitive level - I suggest $0.10 and you will encourage smaller companies to sign up. The more companies bidding, the quicker the bids will increase.

It seems pretty simple to me. After all, you can set up a PPC facility using a 50 buck script and if you have good targeted traffic, then advertisers will be prepared to bid what your traffic is worth to them.

However, I like the searchking.com pay per day bid system - take a look at their site to see how this works.

Mark

The CPC system I'm developing is nothing like Overture in that bid amounts won't determine placement. Rather, I intend to charge a flat CPC rate. Since other factors will determine placement, I figure a click is worth a click regardless of whether the link appears at the top or bottom of the stack.

This makes determining a CPC rate rather difficult as it seems I'm navigating murky waters. I'm not out to gouge anyone and I want to give smaller companies and start-ups a fair shake. On the other hand, I'd rather lower my prices in the future, than raise them.

Ah, I understand what you are trying to do now. However, if the CPC is not determining placement, what is ? Is this going to be a search I could optimize a client's site for ? If so, then it is worth something. If not, what is the incentive for those hosts that appear below the top ten (or twenty ?) of the results. They will get minimal traffic and you will receive minimal income.

As a straightfoward advertising model (ie: for text links, button and banner ads) I like CPC, but if there is no opportunity to buy or optimize for top results for a search, I think you will struggle with this advertising model.

Basically, all sites paying on a CPC basis must be able to get traffic, otherwise why bother.

It looks like most want to pay $0.01/click. Does that mean that you'll be offering it at that rate? Afterall, that's what this little bit of analysis has shown you should charge. :)

However, I like the searchking.com pay per day bid system

How is it better? Not at all - nothing is better than paying only per clicks. Well, actually something better than that is paying only for sales. Good luck with that.

Well, I don't want to reveal my business plan before I launch the site but I will say that all advertisers will have a shot at making the top 10/25 as long as they're willing to make other "sacrifices".

Consider it all an experiment. Personally, I think the concept of bidding for placement is fundamentally flawed. Great for publishers like Overture, and great for advertisers with deep pockets. For every advertiser who enjoys its convenience, however, I'm sure there are 8 or 10 who bemoan its unfairness.

And where does this all leave the consumer? Most surfers, I suspect, are indifferent to the amount companies are willing to pay for premium placements. And it's clear that sites such as Overture (that prominently display companies such as *****) are not the greatest measure of quality.

And no, the CPC will probably be more than 1 cent. :) I think this poll has proven that if there isn't a free option, people will choose the next lowest option.

I plan, however, not to charge for any clicks or impressions until the site starts costing me money. I'll make a formal announcement in the Related Offers/Requests board when the site becomes available.

Thanks to everyone for their feedback thus far.

Clue us in :)

Personally, I think the concept of bidding for placement is fundamentally flawed.

How is it flawed? Bidding is competitive, meaning whoever pays the most wins - simple. If everyone pays the same then it is not competitive and then it becomes an issue of how you will decide who gets what position (may be alphabetical, may be by date).

For every advertiser who enjoys its convenience, however, I'm sure there are 8 or 10 who bemoan its unfairness.
Yep! if you look at that way, the whole world is unfair. To tell you the truth I can't get in overture on the first page on many a serach terms, but there is nothing unfair about it. It is starightforward and I can't complain because someone like Microsoft came and bid five bucks - too bad for me.

Anyway, if you have something better then we will see and you will probably have a lot of interest.

I thought I'd explained this adequately, but I'll rephrase. Please excuse me if I repeat myself.

IMO, the main flaw in the Overture model is that it's built for advertisers, and advertisers alone. Consumers have been left out of this equation. While sites such as Altavista and Google organize their listings according to keyword/link density, Overture does so in more or less an arbitrary fashion.

As I've said, the amount companies are willing to pay for placement is a meaningless criteria to the casual surfer, and offers little value in regards to their search efforts. Those who do notice the bids may:

A. feel as though they're being "bought"

B. be led to the false assumption that higher bids equate to a higher level of service/quality

C. be competitors (in which case, you certainly don't want THEM following your links).

Consequently I've noticed that sites like Overture create the most buzz in advertising circles, while most general users seem to gush over Google.

Overture don't count on their usrs alone, they partners with Giants like AOL and Yahoo.... so it's not only people searching on their engine but on the others as well.

Originally posted by Lonny
Overture don't count on their usrs alone, they partners with Giants like AOL and Yahoo.... so it's not only people searching on their engine but on the others as well.

Very true Lonny, only 5% of overtures traffic comes from their own site. The other 95% comes from partners and affiliates. And to be honest I dont see how paying for positions reduces the quality of search results, if anything they can be greatly improved. I've never heard anyone complaining about how you cant find what you want in the yellow pages, bacause its just stuffed full of those greedy businesses that want to pay to promote their services.

If indeed only 5% of Overtures traffic comes from their site, this only serves to reinforce my point that customers want their listings arranged in a more meaningful fashion. In fact, I'd say the nature of Overture's model makes partnerships a necessity. Otherwise how could it compete with the likes of hand-indexed sites like Yahoo, or sites that employ advanced search algorithms like Google?

And I'm sorry, but that Yellow Pages analogy was pretty horrid. Last I checked, TYP arranges its listings alphabetically so I really don't see what it has to do with anything.

Originally posted by northernscum

And I'm sorry, but that Yellow Pages analogy was pretty horrid. Last I checked, TYP arranges its listings alphabetically so I really don't see what it has to do with anything.

No need to be sorry. As far as I'm aware yellow pages promotes those with more advertising dollars above those with less. You might have even noticed full and half page ads breaking up your alphabetical listing ;-)

The purpose of overture is to promote those who wish to pay to attract business above those that want it for free. We live in a capitalistic world, and this is just another example of a market economy working efficiently.

As far as google is concerned, they recently announced that they are currently reviewing the option to place paid listings above their main site indexing. So don’t be too surprised if in the new year overture signs up another big contract.

Forget about half/full page ads for a moment, think how successful The Yellow Pages would be if they ordered businesses starting with Z, then N, then S, then D, and you might understand the point I was trying to make (and again, how bad this comparison is).

Yes, yes, capitalism rules and Overture is great, but this has absolutely nothing to do with my original sentiment -- that is -- the bidding for placement model neglects the user element. This IMO, is a flaw.

Care to refute that, or would you like to talk about the phone book? Or how about the New York Yankees? :)

Going back to my flawed analogy:

The yellow pages is in alphabetical order simply because you cant type a key word into the damn book. Once you’ve looked up web host in the index, your faced with ads, which are promoted above and beyond the sub indexing with the web hosting section of their directory.

Overture, findwhat etc have a great advantage in that you can type a key word (or use their directory AKA index). One you are within the subsection of your choice you are again shown ads, this time in the form of targeted banners and priority placed entries.

The aim and purpose of both systems is the same! Buyers are introduced to sellers who are willing to pay most for the business introduction.

I thought people had all finally come round to the fact that nothing on the internet can be free for long. Google even came round to that fact this year and introduced targeted sponsorships. It doesn’t make them any less useful.