GoTo.com, hoping to stay one step ahead of an industry showing signs of enthusiasm for its innovation of charging advertisers to list their sites at the top its search results, is expected to announce next week that it is taking steps to let more Web destinations install its search engine on their sites.
Small Web sites will be able to install search capability automatically through the engine's main site at www.goto.com. The move follows a similar product called “Search-in-a-Box” that GoTo.com began earlier this year. But unlike Search-in-a-Box, which steers visitors performing searches to the GoTo.com main page, a newer product — called Integrated Search — lets sites hold onto their traffic.
That's the major selling point for the product, which GoTo.com is pitching to Web locales that put a premium on visitor loyalty. The company previously had set up only a few larger sites with capability similar to Integrated Search, and the program had to be implemented manually, said GoTo.com CEO Jeffrey Brewer.
“There's a big problem with online advertising today,” Brewer said. “It's historically been hugely concentrated at the portal sites.” Brewer cited estimates indicating that more than 70 percent of all ad dollars spent on the Net go to the top ten portal sites, though 85 percent of ad impressions take place elsewhere.
“They only capture 15 percent of the impressions that consumers view on the Internet. So there's a huge discontinuity there,” he said.
One portal site drawing a fair share of the ad dollars is the one run by Alta Vista Co., Houston, which recently began giving advertisers the chance to top the list of hits Web surfers receive when they perform searches at www.altavista.com. In return for the higher listing, advertisers pay the engine for each Web surfer who clicks through to their pages.
GoTo.com, Pasadena, CA, pioneered the concept more than a year ago, and the company declined an invitation from Alta Vista to help the larger portal set up its own pay-for-listing program. Alta Vista's system differs from GoTo.com's primarily in that only the two highest bidders receive listings.
To help it with Integrated Search, GoTo.com hooked up with 24/7 Media Inc., New York. Web sites using Integrated Search will have the option of selling banner advertising through the online ad network on their search results pages. No money changes hands between GoTo.com and 24/7, the latter of which will promote the program to its affiliate sites. GoTo.com will make its money on the search click-throughs, while 24/7 will take home a commission on selling keyword-targeted ad banners to advertisers.
Since GoTo.com is more interested in selling the search listing to Web destinations sites that have paid for the most visible spots, affiliate Web sites will keep the majority of the revenue generated by the banner ads. Brewer added that GoTo.com arranged a “more favorable” than normal commission structure with 24/7.
The pact marks an expansion of the two companies' work together; 24/7 signed GoTo.com to its Search/Directory ad channel in March.
For its part, 24/7 is touting the targeted nature of the program to its advertiser clients, said Scott Paternoster, the company's director of national sales. He sees other advantages over advertising with the bigger portal sites as well.
“Imagine being a direct marketer and looking for a return on investment and you're advertising on a [larger] search engine that may have a competitive product there,” Paternoster said.
GoTo.com's Brewer said the company also approached ad network DoubleClick Inc., New York, about partnering in the deal, but found 24/7 more receptive to the idea.
“[24/7] understood the value that we were creating and they understood the opportunity for them in terms of expanding the inventory of the most targeted banners sold: Keyword-targeted searches. They get direct marketing,” he said.
