Paid-for search is the most lucrative advertising model on the Internet--it's worth $2 billion this year alone, according to Jupiter Research. Each of Overture's 88,000 advertisers bid a certain amount of money in order to be listed at the top of Overture's many partner sites, which include MSN, Freeserve, Yahoo! and Lycos. Advertisers pay Overture the amount they've bid whenever a visitor clicks on their link.
So will increasing consolidation within the market drive up bid prices even further and leave small businesses out of pocket? Yahoo! naturally thinks small businesses can only benefit from its latest acquisition by gaining access to 'on e-stop-shop' integrated marketing.
"Small and medium-sized businesses will have the opportunity to reach additional consumers and generate targeted leads," Yahoo! spokeswoman Joanna Stevens said. "The great thing about commercial search is it's a cost-effective way for small to medium businesses to advertise, since they pay only as much as they value each qualified lead." Forrester Research analyst Charlene Li said the deal would let small businesses "consolidate several Web services into one place".
Although one anonymous Overture user employed to hid on keywords for his company found using Overture "amazingly successful", he said top keywords were way too expensive. Partner sites that display Overture's results, like MSN, tend to jumble up non-sponsored links with sponsored ones, he added. "That's really not what a search engine is for. The Google model is much more honest and straightforward in the way that it presents adverts and spidered search terms."
For our Overture user the acquisition wasn't ideal: "I'd rather have choice, To an extent, a duopoly is being created ... If Overture sells its results on to partners in a way that means the results are more meaningful, then all well and good. But if they try and milk money out of it ... they're shooting themselves in the foot."
Yahoo! is currently in partnership with Google to get spidered search results to its port& but has been widely expected to dump Google after acquiring the Inktomi search engine in late 2002.
Yahoo! also owns the powerful AltaVista and Fast search engines which Overture acquired earlier this year, and the company is busy integrating the results. "Assets of AltaVista and Fast are complementary to those we already own," said Stevens. "Fast has outstanding capability in linguistics and local language search and AltaVista excels in multimedia."
The new, advertising-focused Yahoo! has set itself up to take Google on. MSN is also developing its own search bot, and could acquire another pay-per-click company like FindWhat.com. However, end users may become disillusioned by the rise of paid for searches. In June Forrester found that 42 per cent of US consumers didn't trust paid listings.
"Consumers may not trust the listings," said Forrester's Li. "But as long as they use them--which means they trust them enough to click on them--marketers will continue to pay for them."
Posted by kimgilmour at April 26, 2004 10:11 AM