Every time a user clicks on one of the Overture ads, that action generates revenue for both MSN and Overture. Previously, MSN Search carried at most three Overture listings; now it may carry as many as eight in various parts of the page.
The move is somewhat surprising in light of Yahoo's agreement in July to acquire Overture, of Pasadena, Calif., for $1.63 billion in stock and cash. (The deal is expected to close in the fourth quarter.) Even before the deal was announced, MSN had launched a project to develop its own search engine. But until it launches its own platform -- MSN hasn't set out a timeline -- it must rely on Overture for a piece of the hot paid-search ad sector.
"I'm confident they're going to go away from Overture and develop their own in-house system," said Danny Sullivan, U.K.-based editor of industry newsletter Search Engine Watch (http://www.searchenginewatch.com/1). "I would expect it to happen some time next year."
Successful Relationship
Paid-search listings are short text ads, with links to the advertisers' sites, that appear next to the results of a Web search. Advertisers bid for placement on a results page, paying the search engine every time someone clicks on their ad. The major sellers of paid listings -- Overture and closely held Google Inc. -- license these listings to other Web sites, such as MSN. The revenue generated from the ads is split between the provider and the Web site.
An MSN spokeswoman said the expanded use of Overture listings "comes as a direct result of testing that's proven successful." Before introducing the new format in the U.S. earlier this month, the portal had tested the new format in the U.K. and France since July, she said. She added that "MSN Search is pleased with its current partnership with Overture."
An Overture spokesman said the change occurred within the context of an existing agreement between MSN and Overture. Representatives from both companies declined to say what additional revenue is being generated by the move.
Overture's expanded presence on MSN could make its bidding engine more attractive to advertisers, online-ad agencies said. Paid search is one of the fastest-growing segments of online advertising.
"An Overture ad should have a bit more impact today than it did last month," said Jim Hedger, who manages search-engine marketing for StepForth Placement Inc. (stepforth.com2), a Victoria, British Columbia, search-engine ad firm, in an e-mail. "MSN drives a fairly significant amount of traffic around the Web."
Of all Web searches in July, 15.6% were made on MSN and Microsoft sites, the fourth-most-popular sites for search, according to comScore Networks, an Internet market-research firm. Google was No. 1, with a 31.5% share of searches.
Testing the Layout
Some industry watchers speculated that MSN is testing the new layout -- which brings it closer to the look of Google -- as a temporary move before developing its own search engine and paid-search bidding platform.
"Will they do it themselves?" asked Bob Friedenthal, founder and president of 411web Interactive (http://www.411web.com/3), a Los Angeles online-ad agency that does a large portion of its business with MSN. "Microsoft has proven very smart at going into new businesses and beating the competition."
For people who search the Web using MSN, the change means an even-higher proportion of search results they see will be paid-for results, rather than those generated by so-called algorithmic engines that automatically index Web sites and rank them by relevancy.
Search-engine operators say users don't mind the paid-search ads, since they are often relevant and useful. A recent Jupiter Research Consumer Survey found that only 20% of more than 4,000 online adults said they are concerned about confusing paid-search ads and nonpaid search results.
Write to Carl Bialik at http://online.wsj.com/article/0,,mailto:carl,00.html?mod=article-outset-box4
URL for this article:
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html Hyperlinks in this Article:
(1) http://www.searchenginewatch.com/
(2) http://stepforth.com/
(3) http://www.411web.com/
(4) http://online.wsj.com/article/0,,mailto:carl,00.html
(5) http://online.wsj.com/article/0,,SB105830552656134000,00.html
(6)http://online.wsj.com/article/0,,SB105818965623153600,00.html
(7)http://online.wsj.com/article/0,,SB105820471956978400,00.html
(8) http://online.wsj.com/article/0,,SB10551923093794900,00.html
Updated September 22, 2003 4:12 p.m.
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