SmallBusinessNewz

Sometimes the minimum bid might be lower than a dime. Other times, it could be much higher.

Yahoo Search Marketing aims to mimic the auction model by enabling some minimum bids to better reflect the keywords up for grabs:

An auction house has guidelines it keeps in mind when it sets a minimum bid, or the reserve price—how rare a painting is, how famous the guy who painted it is, things like that. We have guidelines that help us set minimum bids, too. Minimum bids can be based on multiple factors, including the quality of the keyword and its value—or how much we think that keyword is worth to its bidders.

Yahoo wants to reward quality ads with better rankings in paid search as well as lower cost. The better the quality, the more likely an ad will be clicked and Yahoo will make money.

When Yahoo looks at the value of a keyword, at factors like competitor bidding and others, they won't look at conversion data for that keyword to come up with a minimum bid. Doing otherwise could give Yahoo an unfair advantage, so they will avoid that situation.