'dedicated hosting' on overture:

$10 per click!!!!!!

probably won't be up there for long though. I've seen it and 'web hosting' go pretty high before. I suppose someone's making a push for the top with the weekend coming. :)

Greg Moore

That's just insane -- I really don't understand anyone paying that much for advertising. :rolleyes:

I'm guessing as this is a dedicated server, people will tend to shop around and research quite a bit before signing up. As such, I would say that only every 50th click will sign up -- if they are lucky!

Now that's $500 for a single customer. :eek:

Avara,

You hit the nail hard--that's exactly how such a click price is justified.

You don't agree that $500 is a fair cost-of-acquisition for a dedicated server customer? Taking into account the average monthly fees for a dedicated server (~$200-$500) and the average life span of a dedicated server customer (> 1 year), I think you'll agree that $500 is not unreasonable.

Consider this, by comparison: MSN is willing to pay $400 to acquire a customer. Remember those deals at Staples--get a $400 PC for free if you commit to MSN for a year. And what revenues does MSN enjoy monthly from a customer, 20$? $30 even? Only one-tenth the revenues enjoyed by the provisioning of a dedicated server...

An over-simplified analysis, of course, but I think customers are worth a lot more than most people think.

While I agree with parts of what you are saying, I think the following should also be taken into account:

1. Most dedicated hosts now also offer $100/mo servers
2. If you are paying a host $200 a month, most of that money will probably be used to pay for server, staff, connectivity, and so on. This leaves very little profits -- probably less than $500 over a year.

Just something to think about as well. :)

True enough.

Note, though, that the big spenders who reign in the top "dedicated servers" slots on Overture don't sell the cheap stuff. Nothing below $250/mo. or, in Atlantic.net's case, they require a 12-month commitment on every server including their cheapest $225/mo. option.

You point out that the annual margins are slim to the tune of $500. Keep in mind though, that if it costs $500 to acquire such a customer, it ain't a bad deal--they make their money back. Not the most lucrative advertising opportunity in the world, but from these guys' point of view: if we can break even being at the top of all the major seach engines, that's damn compelling. The customer acquisition pays for itself, and we get great branding thrown in for free.

Finally, consider this. The name of the hosting game these days is volume--with profit margins so slim, as you mentioned, they must acquire lots and lots of customers to be a very profitable company. Being at the top of the search engines, while not terribly lucrative on a per-acquisition basis, probably gets them a higher volume of customers than any of their other online marketing initiatives.