Yahoo in search of...
Yahoo, the Internet portal company, announced that it is buying Overture, which supplies an online search engine, for $1.63 billion. Overture makes its money by selling text-based advertisements that appear next to searches. In this way, it emulates the fantastically successful Google. Yahoo already uses Overture's search engine on its site, as does Microsoft (for MSN). (Overture, by the way, has incorporated the technology of the once-dominant AltaVista search engine.) Yahoo last year bought another search engine company, Inktomi.
Yahoo is clearly trying to emulate the successful Google model. Google has become the leading Web search site (Yahoo is number two). In fact, the verb "to google" has entered the lexicon, as in, "I googled him as we were talking on the telephone." More important, Google has been enormously successful at selling advertising, and many businesses think that buying Google space is the only effective form of Internet advertising.
As one commentator notes, "Many ad networks saw their fortunes fall with the dot-com bust, but as search-related advertising has emerged as a winner in recent years, it's helped to fuel a revival in the business. The focus Google and others have placed on selling sponsored text links has proved effective for advertisers, partners and Web surfers alike."
Both Google and overture are expanding their advertising offerings. Selling sponsored search links into client sites and developing other experimental forms of marketing. In essence, they are acting as ad agencies for other sites.
One of the results of these moves has been to develop the supposedly wide-open Internet to a more closed space. While it is truly that in theory all URLs are equal, the fact is that search engines are the gateways to mind space. Mind space is the only valuable commodity on the Internet, since shelf space is theoretically unlimited. Unless your site comes up on the first page of a search, for most searchers you might as well not exist. That's why buying ads related to search terms (so that, for example, your gourmet popcorn business pops up when anyone searches for "popcorn" is an increasingly valuable service.
This ability to control mind space makes the Shelf space on search engine pages very valuable territory. Advertisers can deliver a message to a highly focused and relevant audience, one that is, at least, researching the topic or product type. That's worth a lot, if Yahoo can regain ground from Google and collect the ad revenue.
Yahoo has realized that searching is becoming the most important source of revenue it can pursue. The Overture deal may make it more competitive with Google.
