November 14, 2001 10:30 AM PST

Yahoo plays Overture's paid search listings

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Yahoo has partnered with for-fee search service Overture to add sponsored links to its directory, a move to bolster revenue as advertising sales wane.

The Internet portal said it plans to integrate Overture's paid listings, or"sponsor matches," with its directory pages by Thursday. The service lets advertisers bid for placement in query results rather than rely on natural listings or editorial recommendations. The portal will feature Overture's top five for-fee listings in a clearly marked section separate from the results retrieved by Google, Yahoo's search partner.

Terms of the deal were not disclosed.

Until now, Yahoo has largely held back as many major search services adopted paid-listing models after the online ad market soured. In the past 16 months, online portals including America Online and the Microsoft Network began weaving in for-fee listings to diversify revenue and cash in on some of the burgeoning success of Overture, formerly GoTo.com.

Overture, which recently announced reaching operating profitability, has become the poster child for commercialized search, drawing high demand from direct marketers looking to connect with consumers. With nearly 50,000 advertisers, Overture has wowed the search industry at a time when advertising dollars are scarce.

Earlier this year, Yahoo tested the waters of sponsored links by selling placement for select advertisers at the top of commercial category pages. By partnering with Overture, Yahoo's search results will also return paid listings.

The companies signed an agreement until April 2002, when Yahoo will either begin to sell its own directory placements or continue the relationship with Overture, according to a company statement released Tuesday. But in an interview Wednesday with Scott Gatz, general manager of Yahoo's search and directory, Yahoo plans to forge its own way come April.

"What we announced is that we are entering this business...connecting advertisers to highly targeted traffic and a base of millions of users," he said.

"We absolutely expect to launch our own program in April. For the short term, Overture is the partner of choice," said Gatz. But he added that the company will look for ways to continue its relationship with Overture at that time.

Yahoo's ad ache Yahoo's full endorsement of paid listings comes as the company struggles to broaden its sources of income. In search, the company recently increased its fees for Web sites seeking reviews from Yahoo editors, jumping from $199 to $299. It has also introduced new subscription services such as paid personal ads and an e-mail service for businesses.

"Yahoo Sponsor Matches is consistent with our strategy to leverage our core strengths in order to build growing and diverse revenues," Yahoo CEO Terry Semel said in a statement. "Millions of Internet searches conducted on Yahoo each day are commercial in nature, giving businesses tremendous opportunity to market their products and services through enhanced placement in our search results."

 

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