In a move that underscores the growing importance of paid search engine results, Yahoo! said it has extended its partnership with pay-for-performance search engine Overture for three more years.
“Search and paid listings are key growth areas for Yahoo,” said Yahoo! CEO Terry Semel, adding that the first six months of the portal’s deal with Overture have yielded “strong results.”
Financial details of the deal were not disclosed, though Yahoo! has said in the past that the partnership calls for both companies to split the revenue that accrues as users click on paid listings.
“It is clear that Yahoo! views search as a strategic priority,” Overture CEO Ted Meisel said.
Under the terms of the deal, Overture will continue to funnel listings from its advertiser base of 60,000 customers to Yahoo, which uses the paid listings as “sponsored matches” that usually appear at the top of returned search results.
One Down
Overture, which reported a first-quarter profit Thursday on higher revenue, depends on large portals for much of its revenue, according to analysts.
In fact, the Yahoo! deal came just a day after fellow portal AOL said it would extend until May 1st its current arrangement with Overture, presumably allowing time for a longer-term deal to be negotiated.
Overture also has a deal in place with MSN to provide paid listings in the United States, the United Kingdom and Canada through 2003, and the company provides results to iWon.com and the Walt Disney Internet Group’s Go.com.
In addition, Overture has reached out to PC makers, most recently inking a deal with Hewlett-Packard to provide direct links to its results.
Growing Role
Meanwhile, analysts said, the widespread adoption and financial success of Overture signals that paid search results are here to stay.
Nielsen//NetRatings director and senior analyst Lisa Strand told the E-Commerce Times that consumers have come to accept paid results as part of the cost of receiving information on the Web.
“They know the revenue has to come from somewhere,” Strand said. “And I think if given the choice, they’d accept an advertised result over having to pay themselves for access to that information.”
Clicking Away
Overall, it was a busy week for Yahoo! In addition to forging the Overture deal, the portal named a new chief operating officer, former CNET and ZDNet president Daniel Rosenweig, to oversee product development, marketing, international operations and North American operations.
On Monday, Yahoo! announced the settlement of a US$5 million lawsuit filed by a country western singer whose Yahoo! yodel has become the tagline for the company’s television advertising.
Wylie Gustafson claimed Yahoo! had hired him to record a single commercial, paying him less than $600. While settlement terms were not released, the deal clears the way for Yahoo! to continue using the tagline.
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The pay-per-click services such as Overture’s PPC program are a good service that are of use to searchers and advertisers alike.
The paid listings augment the free search listings and allow advertisers the opportunity to extend their search engine campaigns or to gain visibility at all. Through PPC, small-budget advertisers are able to receive targeted, timely advertising for a reasonable cost.
If these PPC companies serve searchers well with good relevant results, users will continue to accept them and see their value. However, if these companies try to pass off paid inclusion as legitimate results, users will see their companies as fraudulent. Even advertisers will value them if they are fairly implemented.
At least one company has chosen to be dishonest in this regard and is now in serious business trouble. The goal should be to serve the end user well. Paid advertising is not an issue if it is done ethically and serves customers.
However, if Yahoo, Google and others forget who their customers are, they will suffer marketshare loss and negative publicity by implementing these programs.
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