How keyword prices started at one cent per click.
Below is an exerpt from a book on the history of search marketing, The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture by John Battelle.
"...even more audacious, was how Gross [founder of GoTo.com] priced his new engine: one cent per click, an extraordinary discount to the market. He knew his price was seven to ten times less than what every Internet marketer was paying at the time, and in an environment where traffic was crack, advertisers couldn’t help but look to Gross for a fix.
"In short, Gross bought traffic one place for five to ten cents, and resold it on his site for a penny. Not exactly a great business model. But Gross believed the market would take over, and that soon advertisers would compete to be listed first for high-value keywords like “computer,” “camera,” and book titles. On the come, Gross was betting that market forces and the greater value of intentional traffic would push per-click traffic prices past his cost of traffic acquisition.
"…In about six months, Gross claims, the two prices met and crossed – the average price paid by an advertiser rose past the average price GoTo paid to acquire a searcher."
