Reserve Prices

Minimum bids no longer fixed at $.10 for Sponsored Search

If you go to any auction, whether it’s Sotheby’s, eBay or your rural county’s hog auction, there’s usually a reserve price (or minimum bid) set according to what is believed to be the minimum value of the product. It’s their way of making sure that no one walks away with a cheap Van Gogh just because people aren’t lifting those paddles fast enough.

Following the auction model, we are changing the way we set the minimum bids required to participate in a Sponsored Search keyword market. In the next several weeks, we will start calculating a variable minimum bid for some of the keywords you’re bidding on. That means that sometimes the minimum bid may be lower than 10¢. Sometimes it may be higher. Content Match minimum bids currently will remain at 10¢.

What your minimum bid means

An auction house has guidelines it keeps in mind when it sets a minimum bid, or the reserve price—how rare a painting is, how famous the guy who painted it is, things like that. We have guidelines that help us set minimum bids, too. Minimum bids can be based on multiple factors, including the quality of the keyword and its value—or how much we think that keyword is worth to its bidders. Here’s how we do it:

Quality—If you haven’t noticed before, we like quality. High quality generally means that your ads are being clicked more often, relative to your competitors. And that usually means that searchers are finding what they want more readily. So we try to reward quality—first with higher rankings and lower costs, and now, potentially, with lower minimum bids.

Value—While figuring out the value of a keyword can be complicated, we may look at a number of things to determine what it’s worth: for example, how many advertisers are bidding on your keyword, and what they’re willing to pay for it. (Note: we do not use conversion data to determine minimum bids.)

A keyword term becomes “active”—switched “on” in the system and eligible for display—when your bid is equal to or greater than your minimum bid. Keywords become inactive when your bid falls below your minimum. You will be notified in an alert on your Account Dashboard if your bid is about to drop below your minimum, and you’ll have a grace period of up to a few days to raise your bid to keep your keyword active.

What you can do to prepare

A lot of the best practices that are always important in search marketing are especially important when you’re managing your minimum bids. Here are some of the best ways to manage your account:

Get to know your keywords and their value. Since variable minimum bids may be set for each of your keywords, it is important to know which ones work best for your business.

Improve your ad quality. Better ad quality can potentially translate into lower minimum bids.  Plus, it also affects the price you pay per click and your ads’ position in search results.

Learn about updates to the account interface. To help make your bids easier to manage, we are offering some enhancements to your account interface. These include a new search and management tool that allows you to find keywords that are below the minimum bid—bids too low for your keyword to become active—within a selected ad group or campaign.

For more about this change, read our FAQs.

—The Team