One by one the larger search engine are isolating themselves from the very small web site owners that were pivotal to the Internet's initial and continued growth. The latest news has been released and we have to shudder again!

In the past, I and a plethora of other authors were recommending Goto.com as one of the best sources of traffic on the Internet. They had everything going for them in terms of directing targeted traffic, being affordable, having relatively few restrictions that bother honest folk and good traffic stats.

About 4 months ago, the news seemed to get even better as Goto signed up deal after deal to get their top results shown on any number of other large search engines. It looked like nirvana! My, how things have changed with the latest announcements. Despite this, most authors are still recommending Goto without really understanding what the impact of the changes are.

In a nutshell, the deals signed by Goto were only part of an overall change of strategy that leaves smaller website owners in a lurch. The changes don't hurt the sites that are prepared to pay $2.50 for a simple click on the word "mortgage". Goto is more than happy to collect their funds. It is the small niche players that bid on words that few others are interested in that are being punished.

The Day the Sky Fell!
On March 1, 2001, Goto dropped the bomb that was fully expected. The exact statement was:

"Over the last 2 quarters, we have signed a number of big traffic deals with premier Web sites which has resulted in even more targeted traffic to your site. These traffic deals have increased our costs and as a result we're implementing a modest price increase."

The Statement went on to mention two changes including a new minimum bid of $0.05 and a minimum spending of $20.00 a month. The result is that all of your bids that used to be at $0.04 or less will be void as of September 1, 2001 with the grandfathering that Goto will do. A skeptic might say that a potential 500% increase in ad costs is not a "modest price increase"!

The Day the Truth was Told!
Clearly, Goto's in policy was simply the second stage in an overall strategy to increase revenues for both Goto and for its new partners. It is unlikely that the simple execution of additional traffic deals with major players increased overhead significantly. In fact, it is likely the opposite in that the increase of revenue more than offset the "extra" admin that was required to manage the deal.

What is more likely is that Goto and its new partners have some level of revenue sharing agreement. It is also likely that the original selling point to these partners was that the second part of the strategy, the cost increase, would be implemented resulting in higher revenues.

In the end, smaller niche players are being forced into a position where bidding on Goto makes no sense. Many of the site owners I know will bid no higher than $0.03 or so for various terms because they have limited ad budgets or that no one else wants the terms that they are bidding for.

The result of this is that Goto is no longer on my list of recommended sites for smaller site owners. This is not to say that Goto is a bad search engine, quite the opposite, in fact. They are a wonderful service if you have the budget to spend. The key to remember is that 95% of web sites that are related to small business do not have the necessary budget.

What Do I Do Now?
The options for smaller companies are limited. The main option is to use the smaller pay per click engines. Though their traffic is substantially lower than Goto's you can often make up for the difference by joining 3 or 4 of them. Options include Ah-Ha, 7Search and many others.

The other advantage of the smaller pay per click engines is that the costs of bidding will likely be much lower meaning that you can buy more popular words at lower costs.

The second option is to start changing the way you market including the use of banner exchanges and other free traffic generating services. These cost effective sources of traffic are underutilized and give smaller sites a larger presence.

Ron Thibeault is a lawyer with LeClair Thibeault and contributing Editor to St. Nick Studios. His extensive experience in business startups including ThinkRelo.com and commercial law gives him valuable insight into the needs of small business owners.