Yahoo is changing the way they set minimum bids on paid search. Over the next few weeks they will set the minimum bid based on quality and value rather than how much you pay. The minimum bids will be set by individual keyword.

Yahoo describes the change like setting minimum bids in an auction. So the more valuable, high quality, or demand there is the higher the starting bidding price is.

Previously the minimum bid never fell below 10 but with this change you could pay less per click. On the Content Match (your ad showing on web sites instead of with search results) minimum bids will remain at 10.

Heres a breakdown of the factors Yahoo will use to determine minimum bids:

• Value - the number of advertisers bidding on your keyword, and what theyre willing to pay for it.
• Quality - the relevance of keywords, or how frequently users click on the ads compared to competing ads. The better your ad performs the less youll pay per click.

If an advertisers bid meets the minimum bid for their keyword then the ads are eligible to be displayed for that keyword. If a bid falls below the minimum then the keyword the ad wont show. The advertiser will be notified and they can then change their minimum bid.

Theyve also introduced a new search and management tool so advertisers an find keywords that are below the minimum bid and therefore not actively running. Yahoo assures advertisers that most minimum bids wont vary dramatically over time as long as ads dont drop in quality.

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