Search engine marketing firm Overture Services Inc. doubled its price for new or renewed keywords last month from 5 cents to 10 cents.
Marketers are outraged, but not only about the increase. What bothers them more is that Overture didn't give them any notice about the hike.
Marc Saxe, owner of Web site time-share company Resort Opportunities in Palm Desert, CA, said he received an e-mail from bid-management firm Go Toast at 7 p.m. on Thursday, Feb. 6, saying the 10-cent charge was going into effect that day. The higher price is for advertisers' minimum bids.
The e-mail also said Go Toast had been told by Overture that “Listings from 5 cents to 9 cents will be grandfathered for the time being.”
Saxe immediately tried to log on to his account to take advantage of the exemption for his lower-priced keywords. “I was blocked from logging on,” Saxe said.
At 11:30 p.m. Saxe said he was finally able to log on, but “they had already instituted the change.”
Saxe said, “The problem isn't the price increase, it's what they did to enforce it.”
Overture doesn't deny the charge.
The price increase was mentioned at Overture's fourth quarter earnings conference call on the afternoon of Feb. 6, said Todd Daum, vice president of marketing at Pasadena, CA-based Overture.
An e-mail notice was then sent to Overture's approximately 80,000 advertisers at once.
“The notice was given at the time the change went into effect,” Daum said. “At the time the announcement went out, there was no ability to change prices.”
Why not give everyone a week's notice?
“The thinking was to tell everybody at once so there would be no advantage or disadvantage to one group over another,” Daum said.
On Friday, a perturbed Saxe complained to an Overture customer service supervisor that he was unable to change his bid the night before. He asked if his 9-cents-and-under keyword bids would be grandfathered.
“He said ‘no’ not very nicely, and I hung up not very nicely,” Saxe said.
But Daum insisted that the grandfather clause is in effect.
Saxe spends between $500 and $600 a month bidding on Overture's keywords. “This raised my costs by about 30%,” he said.
An advertiser bids a price (now at least 10 cents) for each of Overture's keywords. Competitors can bid higher, and the advertiser can then outbid them. The higher the price bid, the higher the placement in search results on search engines such as MSN, Yahoo! and Lycos. Advertisers pay Overture only when a consumer clicks on their listing.
Overture reported net income of $9.5 million for the fourth quarter of 2002, which ended Dec. 31. That compares with net income of $20.8 million for the same quarter in 2001.
