Google Reduces Minimum Bid on Some Keywords

Google has quietly lowered the minimum price of some keywords in its AdWords program, in a move it hopes will entice more advertisers to try the service.

A Google representative confirmed that the company notified advertisers last week that the minimum bid price for all keywords 5 cents per click. While the majority of keywords were already at this range, others in attractive verticals like travel commanded a higher minimum.

“It gives more advertisers an opportunity to get involved in the auction process,” said the Google representative.

The company did not say how many keywords or advertisers were affected by the change, but pointed out that the cost-per-click model made the majority of keywords well above.

“While [Google’s] had a minimum 5-cent bid for many terms, some popular terms have always been set above this,” said Danny Sullivan, editor of Search Engine Watch, which is owned by the parent company of this site. “It may very well be that this has kept some people from wanting to bid on the terms. It’s especially irritating to be told you have to pay a high minimum bid on a term when no one else is bidding for it.”

The move is against the grain in the paid search industry, which has seen minimum bids rising recently. FindWhat announced a month ago that it would raise its minimum bid price to 5 cents per click. The company said it took the move to keep pace with industry trends, as Overture Services upped its minimum from 5 cents to 10 in February.

Most keywords on Google command far above the 5 cents minimum, with industry analysts estimating that AdWords commands near or over the 37 cents that Overture reported last quarter.

However, Google advertisers have more opportunities for listings, making lower-priced keywords potentially more prominent. Unlike Overture, which typically lists four sponsored links on partner sites like Yahoo!, AdWords results on Google can return up to 10 listings. In addition, Google does not rank its listing purely by bid price, factoring in how many clicks the listing generates.

“Brands, in particular, are rewarded in Google’s system because searchers are more likely to click on branded URLs and listings that include brands,” said Kevin Lee, chief executive of search marketing firm Did-It.com. “The low [cost-per-click] provides the opportunity for more marketers using brands to test paid search.”

Last week, Google signed a key international distribution deal for its AdWords program with Ask Jeeves’ United Kingdom operations. The company said its international AdWords program would not be affected by the change.