Yahoo! Search Marketing

Yahoo Search Marketing
subsidiary
Industry Internet
Founded 1996 (1996)
Headquarters Burbank, United States
Parent Yahoo!
Website searchmarketing.yahoo.com

Yahoo Search Marketing is a keyword-based "Pay per click" or "Sponsored search" Internet advertising service provided by Yahoo.

Yahoo began offering this service after acquiring Overture Services, Inc. (formerly GoTo.com). GoTo.com was an Idealab spin off and was the first company to successfully provide a pay-for-placement search service following previous attempts that were not well received.[1][2][3]

Origins of GoTo.com

GoTo.com was an Idealab spin off and was the first company to successfully provide a pay-for-placement search service.[1][2][3]

In February 1998, GoTo offered advertisers the option of bidding on how much they would be willing to pay to appear at the top of results in response to specific searches. The bid amount was paid by the advertiser to GoTo every time a searcher clicked on a link to the advertiser's website. By July 1998, advertisers were paying anything up to a dollar per click. In June 1999, GoTo launched a tool set direct traffic centre (dtc) to enable advertisers access to keywords and real time bidding.

GoTo's business model was based on the idea that its paid listings would make it more relevant than other services, especially for general searches, and web sites that pay more are probably better sites. A similar service had been offered by Open Text in 1996, but this precipitated outcries and bad publicity because searchers at the time did not want the search process more commercialized.

In contrast, GoTo's pay-for-placement model was very successful. Commentors theorised that the web had matured in the intervening two years, and these type of economic models were more acceptable since the web was no longer just a place for academic research, but also a place for buying products. GoTo founder Bill Gross (entrepreneur) speculated at the launch that GoTo would succeed because, as a relatively new service, it had no reputation to taint with paid listings, unlike Open Text.

On October 8, 2001, GoTo.com, Inc. renamed itself Overture Services, Inc.[4] GoTo's chief operating officer Jaynie Studenmund said "We also felt it was a sophisticated enough name, in case our products expand."

Through partnerships, Overture enabled portals such as MSN and Yahoo to monetize the hundreds of millions of web searches made each day on their sites. Indeed, these partnerships proved highly lucrative, and in a period otherwise marked by dot-com failures, Overture became a substantial profit driver for portals like Yahoo[5]

This success enabled Overture to acquire web sites such as AltaVista and AlltheWeb.[6]

Acquisition by Yahoo

In 2003, Overture was acquired by its biggest customer, Yahoo, for $1.63 billion.[6] The old brand name of Overture has now been phased out as Yahoo re-brands many of its products under the Yahoo name. The exception to this is in Japan and Korea where the local businesses continue to use the Overture brand.

Patent litigation

In May 1999, GoTo.com filed a patent application titled "System and method for influencing a position on a search result list generated by a computer network search engine". The patent was granted as US 6269361  in July 2001. A related patent has also been granted in Australia and other patent applications remain pending.

Prior to its acquisition by Yahoo, Overture initiated infringement proceedings under this patent against FindWhat.com in January 2002 and Google in April 2002.[7]

The lawsuit against Google related to its AdWords service. In February 2002, Google introduced a service called AdWords Select that allowed marketers to bid for higher placement in marked sections - a tactic that had some similarities to Overture's search-listing auctions.

Following Yahoo's acquisition of Overture, the lawsuit was settled with Google agreeing to issue 2.7 million shares of common stock to Yahoo in exchange for a perpetual license.[8]

Adware partnership

In April 2003, Overture announced a three-year partnership with Gator Corporation, (now Claria Corporation) an adware company. Under the partnership, Gator's software monitored a web-user's activity on web sites and search engines (even sites such as Google that are not affiliated with Overture) and grabbed search keywords. These keywords were submitted to the Overture search engine. As a result, advertisers who paid for listings in Overture found their products advertised through Gator's Search Scout software, even if they wanted nothing to do with Gator. Overture faced a great deal of criticism for entering into this partnership.[9]

When Yahoo acquired Overture, the Claria software impaired the operation of Yahoo's services. For example, when a user with a Claria application installed used Yahoo Search, they received a standard set of Yahoo results with sponsored listings at the top supplied by Overture. The user would then receive a full-screen pop-under window from Search Scout. Since Search Scout uses Overture's paid listings as well, Claria's window has exactly the same listings as the Yahoo search results.[10]

Subsequently, Yahoo came out with the Yahoo Toolbar, which allows users to remove adware and spyware from their system. The toolbar affected the operation of Claria's software and may have put stress on the relationship between the two companies.[11] Claria's website does not list Yahoo as a partner and a March 2006 press release states that they are exiting the adware business.

See also

References

  1. 1 2 GoTo Going Strong, Danny Sullivan, The Search Engine Report, July 1, 1998
  2. 1 2 Pay-for-placement gets another shot, Jeff Pelline, CNET News.com, February 19, 1998
  3. 1 2 Who Will GoTo.com?, Ken Glaser, OnlinePress.com, Feb. 20, 1998
  4. ↑ GoTo Makes Overture To New Name Danny Sullivan, The Search Engine Report, October 2, 2001
  5. ↑ Yahoo reports profit on higher revenue, Jim Hu, CNET News.com, October 9, 2002 - estimating that Overture contributed $25 million to Yahoo's revenue in Q3 2002
  6. 1 2 Yahoo to Acquire Overture Yahoo press release, July 14, 2003
  7. ↑ Overture sues Google over search patent, Stefanie Olsen and Gwendolyn Mariano, CNet news.com, April 5, 2002
  8. ↑ Google, Yahoo bury the legal hatchet, Stefanie Olsen, CNET News.com, August 9, 2004
  9. ↑ Overture and Gator summary of the agreement and objections by pcpitstop.com
  10. ↑ Yahoo and Claria analysis by pcpitstop.com
  11. ↑ Yahoo clamps down on Claria adware, Stefanie Olsen, CNET News.com, August 6, 2004

External links

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