• by Ken Liebeskind , May 4, 2001

How frequently do advertisers get to set the price for their ads? In the online world, anything is possible.

Search123, a search engine that posts listings on a cost per click basis, will add banners and buttons to its search page and allow advertisers to establish the CPC price they pay for them.

The company introduced the new ad model at the @dtech show in Los Angeles yesterday.

In the past, advertisers have bid for the best positions at Search123.com keyword pages. With the new model, they won't just bid for keyword positions, they'll bid for four advertising positions on each keyword page--one large banner and three buttons.

"No other online ad network sells banners this way. We let bidders set the price," says James Beriker, CEO of Search123. The bidding process works because premium space on Search 123.com is valuable. "They all want the first position, so we give them the tools to fight it out," he says.

Advertisers log onto Search123.com to bid for keywords. Their bids are posted on the keyword pages and they can do proxy bidding, which allows them to set a high price they'll pay, with their bids automatically increasing whenever a new high bid is placed.

Advertisers will pay 1.5 times the number one bid for the banner position on the page. The extra charge is a premium, according Beriker. "We want to tie it in with the value of the click on the page," he says.

Visitors come to Search123.com from about 400 partner sites, including Netzero.com, Divorce.com, Cash.com and Fun.com, which send them to Search123.com based on the keywords they select. Type in the keyword "credit card" at Netzero's personal finance tile, for instance, and you'll be taken to Search123.com, which lists credit card sites.

Credit card companies such as Capital One Platinum Visa and Bank of America Visa are listed on the page, but they will soon be able to buy banners on the page and set the price for them. A typical price for a keyword listing is 76 cents per click. The same price may be paid for a banner, if that's the top bid, Beriker says. Much higher rates are possible, depending on the keyword and the value of the listing.

Letting advertisers determine the price of banners is the key novelty for Search123. But having advertisers pay for banners on a CPC instead of a CPM basis is also unusual. "Some networks offer CPC banners, but how do they come up with the pricing?" Beriker asks. "How much is a click worth? We let the marketers decide."

He says CPM buys have become unpopular because simple Web impressions don't draw traffic. CPM prices have dropped dramatically, but advertisers are still unhappy, because they don't work. "If CPM banners don't perform, what's next? CPC performance based advertising is a no-brainer," he says.

Search123 will begin selling banners and buttons in two weeks.

- Ken Liebeskind may be reached at kenrunz@aol.com