Overture Deals Add Revenue Sources

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Pay-for-performance search engine Overture is increasing its revenue streams through new alliances with InfoSpace and Yahoo.

Overture, formerly GoTo, and InfoSpace, an Internet, wireless and broadband infrastructure provider, extended their search agreement until 2004 and expanded it to include Overture's search results on Excite.com. InfoSpace bought some of Excite's assets after bankrupt Excite@Home said it would shut down by Feb. 28.

In addition, Overture and Yahoo teamed on Yahoo's Sponsor Matches program, a pay-for-placement program on Yahoo's search results. Overture will distribute its search listings product on Yahoo search results pages until April 2002, when Yahoo will extend the agreement or run its own Sponsor Matches program.

One Internet analyst hailed Overture's expanding network and pay-for-performance placement as a profitable model for other search engines and portals.

"This just confirms that they [Overture] have developed one of the more interesting and sustainable technologies on the Internet," said Ned Hickok, managing director of Greenfield Consulting Group, Westport, CT. "Everybody is buying their service, and everybody wants to re-sell their service."

Overture is increasing its revenue streams when portals and search engines are "desperate" for revenue streams, he said.

"If you think of a Yahoo, for example, they really only have one [major] revenue stream, which is advertising ... whereas Overture's product is really pay-for-performance or pay-for-position, more like the Yellow Pages," he said.

In the classic banner-ad revenue model, a company like Yahoo is paying its ad sales staff to approach advertising agencies and marketers. With the pay-for-performance model, advertisers can buy the space themselves with little creative work involved, Hickok said.

In addition, while companies such as Yahoo are chasing the largest advertisers, pay-for-performance search engines are attracting smaller marketers.

"Though some of those big advertisers will buy the 'pay-for-position' Overture space, you will find a lot of small companies going in and doing it," Hickok said. "There is a huge consumer acceptance for pay-for-position search engines, and there is a need and demand for those advertisers willing to pay for it."

Meanwhile, InfoSpace said its acquisition of Excite's physical assets, including hardware, employees and debt, will "significantly increase the company's position in the search and directory markets" by expanding distribution of its products.

InfoSpace can offer its wireless services to Excite.com users, letting them have their personalized data available on wireless networks. InfoSpace also acquired the right to Excite.com's domain names, trademarks and user traffic.

"Search and directory are at the core of InfoSpace's wireline business, and Excite is a large opportunity to expose millions of users to our high-quality products," said York Baur, executive vice president of wireline and broadband for InfoSpace.

Though InfoSpace will power the search and directory components of Excite.com, it will sell or license the portal's additional components to portal iWon.


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