Overture upsets its small customers

January 9, 2004

Overture has upset some of its small pay-per-click customers in the U.K. by implementing a minimum monthly spend on its network of £20.

The new minimum spend will be effective from 1 February, although Overture said it will be implemented on new accounts before affecting existing customers.

The move comes after Overture implemented a minimum bid price of 10 cents per click last year, and some in the industry believe it will unfairly squeeze out customers that spend less than £20 a month.

Among the most frustrated are consultants who buy small amounts of search listings space on behalf of clients. One said he will either have to close those accounts down or face the "nightmare" task of integrating them into one.

Others in the industry believe that Overture may be shutting itself off from potentially bigger accounts, since many people that are new to PPC start out on a low budget.

One particular user, which started out on very low budget and now spends over £1,000 a month with Overture said they might never have started had there been a minimum spend in place at the time.

However, on a grand scale, the move will not affect a large proportion of customers, as the majority will already spend over £20 a month, and while Overture may lose some very small accounts, it isn't likely to do the company any harm.

Karen Salamon, UK marketing director at Overture, said there was an inherent cost in setting up and serving customers, and since it doesn't charge a set-up fee, this cost needs to be covered.

"We are not trying to penalize customers that are not spending that much. I think £20 is a low entry-level and most of our customers should be able to spend that much," she added.

Salamon pointed to as a comparison, which charges a minimum £250 annual fee for advertising on its site, which is more than it would cost for an advertiser spending the £20 a month with Overture.

Meanwhile, Google, the company's core rival in the PPC space, which does not use 'human' editors to vet keyword ads, has not yet implemented a minimum bid price or monthly spend, though it does charge a £5 activation fee.

Source: Net Imperative


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