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?