Yahoo! Search Marketing is a keyword-based "
Pay per clickPay per click is an Internet advertising model used on websites, in which advertisers pay their host only when their ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
" or "
Sponsored searchSearch engine marketing, or SEM, is a form of Internet marketing that seeks to promote websites by increasing their visibility in search engine result pages through the use of paid placement, contextual advertising, and paid inclusion....
" Internet advertising service provided by
Yahoo!Yahoo! Inc. is an American public corporation headquartered in Sunnyvale, California, , that provides Internet services worldwide...
.
Yahoo began offering this service after acquiring
Overture Services, Inc. (formerly
Goto.com). Goto.com was an
IdealabIdealab is a business incubator based in Pasadena, California.-History:Idealab was founded by Bill Gross in March 1996...
spin off and was the first company to successfully provide a pay-for-placement search service following previous attempts that were not well received.
Origins of Goto.com
Goto.com was an
IdealabIdealab is a business incubator based in Pasadena, California.-History:Idealab was founded by Bill Gross in March 1996...
spin off and was the first company to successfully provide a pay-for-placement search service.
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.
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 GrossBill Gross is an American business manager. Born in 1958, he grew up in Encino, California. He founded GNP Loudspeakers , an audio equipment manufacturer; GNP Development Inc., acquired by Lotus Software; and Knowledge Adventure, an educational software company, later acquired by Cendant...
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. 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
MSNMSN, formerly The Microsoft Network, is a collection of Internet sites and services provided by Microsoft. The Microsoft Network debuted as an online service and Internet service provider on August 24, 1995, to coincide with the release of the Windows 95 operating system.The range of services...
and
Yahoo!Yahoo! Inc. is an American public corporation headquartered in Sunnyvale, California, , that provides Internet services worldwide...
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!
This success enabled Overture to acquire web sites such as
AltaVistaAltaVista is a web search engine owned by Yahoo!. AltaVista was once one of the most popular search engines but its popularity has waned with the rise of Google.-Origins:...
and
AlltheWebAlltheWeb is an Internet search engine that debuted in mid-1999. It grew out from FTP Search, Tor Egge's doctorate thesis at the Norwegian University of Science and Technology, which he started on in 1994, which in turn resulted in the formation of Fast Search and Transfer established on July 16,...
.
Acquisition by Yahoo!
In 2003, Overture was acquired by its biggest customer,
Yahoo!Yahoo! Inc. is an American public corporation headquartered in Sunnyvale, California, , that provides Internet services worldwide...
, for $1.63 billion. 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.
Details of current service
Goto.com's and Overture's original services provided only a list of search results ordered according to the bid amounts paid by the respective advertisers. Yahoo!'s Search Marketing's latest iteration, code named Panama, was released early in 2007. It replaced the old formula with one more similar to what Google AdWords uses to rank advertisements against search results. The exact formula is secret, but it is basically Bid * Quality Score = Ad Rank, where quality score is based on the ad's CTR (click-through-rate), the relevance of the ad to the creative (known as "Quality Index"), and the 'quality' of the landing page the ad is sending the user to.
Yahoo! Search Marketing also provides features such as Geo-targeting, Ad Testing, Campaign Budgeting, and Campaign scheduling.
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 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
GoogleGoogle Inc. is an American public corporation, earning revenue from advertising related to its Internet search, e-mail, online mapping, office productivity, social networking, and video sharing services as well as selling advertising-free versions of the same technologies. Google has also...
in April 2002.
The lawsuit against Google related to its
AdWordsAdWords is Google's flagship advertising product and main source of revenue . AdWords offers pay-per-click advertising, and site-targeted advertising for both text and banner ads. The AdWords program includes local, national, and international distribution. Google's text advertisements are short,...
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.
Adware partnership
In April 2003, Overture announced a three-year partnership with Gator Corporation, (now
Claria CorporationClaria Corporation was a media marketing software company based in Redwood City, California. It was established in 1998 by Denis Coleman. Its name was often used interchangeably with its Gain advertising network, which it claimed serviced over 40 million users...
) an
adwareAdware or advertising-supported software is any software package which automatically plays, displays, or downloads advertisements to a computer after the software is installed on it or while the application is being used...
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.
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 the exact same listings as the Yahoo search results.
Subsequently, Yahoo! came out with the
Yahoo! Toolbar, which allows users to remove
adwareAdware or advertising-supported software is any software package which automatically plays, displays, or downloads advertisements to a computer after the software is installed on it or while the application is being used...
and
spywareSpyware is a type of malware that is installed on computers and that collects information about users without their knowledge. The presence of spyware is typically hidden from the user. Typically, spyware is secretly installed on the user's personal computer...
from their system. The toolbar affected the operation of Claria's software and may have put stress on the relationship between the two companies. 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
- Google AdWords
- Microsoft adCenter
Microsoft adCenter , is the division of the Microsoft Network responsible for MSN's advertising services. Microsoft adCenter provides pay per click advertisements.-History:...
- Ad serving
Ad serving describes the technology and service that places advertisements on web sites. Ad serving technology companies provide software to web sites and advertisers to serve ads, count them, choose the ads that will make the website or advertiser most money, and monitor progress of different...
- Pay per click
Pay per click is an Internet advertising model used on websites, in which advertisers pay their host only when their ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
- Search engine marketing
Search engine marketing, or SEM, is a form of Internet marketing that seeks to promote websites by increasing their visibility in search engine result pages through the use of paid placement, contextual advertising, and paid inclusion....