Until last week Yahoo! minimum bid for sponsored search keywords was a fixed $0.10. Now Yahoo! has decided to move away from this fixed minimum bid to a variable minimum bid.

Yahoo! Search Marketing has introduced their new pricing structure. Until last week Yahoo! minimum bid for sponsored search keywords was a fixed $0.10. Now Yahoo! has decided to move away from this fixed minimum bid to a variable minimum bid.

Brad Geddes from Search Engine Land will provide more insight into what has changed in your Yahoo! accounts, why you need to check your minimum bids and give you a few points to consider when optimizing your CPC campaign.
Yahoo’s New Minimum Bid Factors

Yahoo uses two main factors for determining minimum bids:
• value of the keyword
• quality

The value of the keyword factor will frustrate many marketers. This value is calculated by many indicators which include the number of advertisers and those advertisers’ bids. This means that for keywords with high competition, the keywords can have higher minimum bids. If there are a few bidders, but they are bidding high amounts, the minimum bids can also be different.

The second factor is one that we’re much more use to in the PPC industry: quality.

In this case, Yahoo is defining quality as a measure of relevance an ad has to the search results. One of the two main factors that Yahoo uses to determine relevance is the ads’ historical performance. This is calculated by examining the click through rate compared to competitors and normalized for position. The second factor is the ad’s expected performance which is solely determined by a Yahoo algorithm that seeks to predict performance.

Get the full story at searchengineland.com
For more information, visit Yahoo! Search Marketing Official Blog