A Futures Exchange for Key Words!!!

Whilst at the First day of the SearchCamp, I observed that most of the speakers were talking about the volatility of the bids for the key words and that set me thinking.

We see the same situation in prices of agricultural and oil commodities, foreign exchange and share prices and the way the uncertainty is managed is by the instrument of Futures wherein a customer pays a small premium for a future price of a share (for example) and has the option to buy it or not to buy it on that particular date.

Likewise, an agency or a client like myself can hedge the risk of the price of keywords relevant to me going up, by bidding a particular amount for a keyword say “loans” at Rs.35 (purely fictitious example, so please do not tear me up) on 1st Jan 2008 and pay a small premium for the same. If the price of ‘loans’ on that day is Rs.50, then I have saved Rs.15 per usage and if it has dropped to Rs.25 then i just forego the premium and carry on with my job. This will make bidding and media buying less hassled and help agencies and clients plan their campaigns with more control and effectiveness!!

Alternatively, we can prepay and take delivery 1 million units of a particular keyword at a certain price (lower than today’s price, for sure) and hedge the risk of the price going up in the future.

Are MCX and Google listening?

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2 Comments

  1. labsji said,

    October 8, 2007 at 7:40 am

    Excellent Idea,
    Google or any other provider does not have an incentive to implement a futures exchange on Keywords.
    Thus it leaves it to the third party to implement the exchange. You have seeded a startup idea. A startup might implement it as a game and learn from it and start making an offering. Keywords futures exchange game. Yahoo had some rudimentary game like this sometime back. I’m not able to locate the url now.

    The startup can incentivise participation by rewarding the winners with adwords credit.

  2. badrirag said,

    October 8, 2007 at 6:12 pm

    Balaji,

    Its better that Google does it than somebody else although it might appear that it is against its own interests in the short term.

    And unless all the publishers like Google, MSN and Yahoo converge on some standards for the keywords, it is quite unlikely that a third party could create a platform that is publisher-agnostic (a variation of the term i picked up in SearchCamp).

    And like the F&O for Shares, this Futures market will be for the top 10000 keywords by value or traffic and then slowly expand to cover millions over time.

    Is there a current system that an agency buys keywords in bulk and deaggregates them for its individual clients? If not, that could be a place to start!!


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