• by Dale Chaney , August 1, 2000

Keyword buys have been among the big attractions in online advertising. When a person enters a search word at Yahoo, AOL, AltaVista or other sites, a search is conducted by that keyword. An individual banner ad may be served on the search-results pages brought up by the keyword. Keywords presumably offer the ultimate in targeting—one of online advertising’s big lures. The idea is that you are reaching a specific audience, which has demonstrated a pre-existing interest in your subject matter. “Keywords allow people to pay for search results,” says online media and marketing consultant Tom Hespos, whose clients have included OpenAuto.com, TMP Worldwide and RealMedia. “And, most people consider search results to be editorial content.”

For most sites, the mechanics of a keyword buy are as simple as the concept itself. Ask the salesperson for the site to check available inventory and estimate how many impressions would fall under that keyword. Advertisers then make the buy based on the projections. There are a few considerations that fine-tune the buy.

The first is purity. One of the decisions for media buyers today is whether they want to keep the targeting component pure and intact, or blend it with other keywords or run-of-site impressions. And, there may be times when that decision is out of the buyer’s hands: a site may require an advertiser to buy some run-of-site along with keyword impressions. At Yahoo, for example, clients can choose to purchase only keywords if they wish. There is no requirement to purchase other advertising. However, the majority of Yahoo’s keyword buys are part of larger programs, with other types of media involved. “It’s tough to base an entire campaign on a keyword,” says one Yahoo employee.

The second factor is pricing. While pricing schemes may vary, anticipate a higher price for keywords than for other ad placements. They are among the most expensive, with CPMs across the industry running at $40 to $80 or so, says Dan Ballister, national sales director of Go2Net Network, which handles advertising for Dogpile, MetaCrawler, Authorize.Net and other sites. Yahoo keywords sell for $882.50 per month for keywords generating fewer than 15,000 monthly

impressions, and $64.50 CPM for keywords generating more than 15,000 monthly impressions. Ask Jeeves’ prices are structured on a “supply/demand” model, according to a company spokesperson, and consider many variables, including whether an advertiser is already a customer for another Ask Jeeves e-commerce product.

In general, “keywords cost more because they are worth more,” says Go2Net’s Ballister. Industry-wide click-through rates have dropped to less than 0.5 percent, but keyword click-throughs are still showing 1.5 percent or more, and in some cases reaching as high as 10 percent or more, according to Ballister. Some people still look at price, and the higher CPMs of keywords can make them nervous. “This is one where you don’t want to look only at CPM,” he says. Some vendors may present a package price that includes one rate for the keyword placement and a lower rate for the non-keyword or run-of-site placement. They will call this their “keyword” price, but it is really a “blended” price. The CPM is lower, but they reduce the quality of targeting and don’t get the number of impressions that might convert to desired action, Ballister says.

The third factor is exclusivity. Keywords may or may not be shared. At Yahoo, for example, a keyword can be shared as long as the keyword yields greater than 15,000 impressions. For an impression count less than 15,000, Yahoo sells it to only one advertiser. Most of the time, however, it is the category that is shared, not individual words. At Ask Jeeves, many advertisers share inventory of the same keyword.

If you cannot or do not want to buy all of a keyword, ask who will be sharing it. This is important because who you share the keyword with may make a difference in how you perceive the word. Ask how much of the keyword—how many of the total projected impressions—the other advertisers have purchased. You may want to increase your purchase to squeeze out competition.