Yahoo! prepares to defend its search engine marketing turf

By Steve Malone

Posted on 30 Aug 2005 at 11:59

Although overshadowed by the Google AdWords/AdSense programmes because of their brand association with the world's biggest search engine and the ubiquity of the Google ads that pop up on small to medium sites all over the world, Overture's contextual advertising actually predates the Google offering. In fact prior to the much-trumpeted Google IPO in 2004, the company settled an outstanding lawsuit with Yahoo! over patents held by Overture to the tune of some $360m worth of shares.

Recently there has been a flurry of activity from the big players. Yahoo!, Ask Jeeves and MSN Search all made announcements regarding their intentions for search engine marketing. From being just two players, next year looks like there will be at least four all offering auction-based keyword matching systems. We caught up with Richard Firminger, the Sales Director for Overture UK to hear his views on the changing Search landscape.

Although Microsoft announced the MSN Keywords business several months ago, the company still has a worldwide contract with Yahoo! Search Marketing Solutions until well into next year. However, Firminger does not think that the end of the contract means that MSN will drop Yahoo! as a partner.

'MSN has been testing their AdCenter for some time and they've only just begun testing MSN Keywords in France,' he told us. 'Does this mean the demise of our relationship with MSN? Not necessarily so. It's not guaranteed that when MSN finishes its test period that is the end of our relationship, It's a complex business to get paid search right.'

'We have hundreds of partners and MSN is actually a small proportion of the total. If MSN broke away from the Overture network it would not have an impact,' he said.

Firminger is concerned that many more companies will try and enter the lucrative search marketing business. At the moment, AOL is losing customers and is trying to reposition itself less as a walled garden but more as an ISP on the Yahoo!/Microsoft model, which may mean the company entering the search engine advertising space.

'Currently there are two major players in contextual advertising and soon there will be a couple more. I'm fairly happy with that. Further fragmentation of the market would be a big issue as it would prevent buyers from buying effectively.'

However, he doubted whether a company, perhaps even one as large as Time Warner could enter the market effectively. 'Its about technology, volume and quality,' he explained. 'You have to have the volume to deliver a sufficient number of clicks. If a big advertiser only gets one click a month, they are not going to be very happy. You also need to be advertising in the right places to deliver the quality. Some of our travel customers are very happy, for example, that their ads appear in the Guardian Online travel section.'

Yahoo's much trialled extension of the Yahoo Publisher Network to include smaller web site publishers was has also now been made official. While seeing the extension as a natural evolution to Overture's Content Match programme for larger publishers, Firminger could not confirm when it might appear in the UK other than to say 'when the turbulence is removed' from the beta system.

Firminger was unable to confirm much of the detail of the new programme including the revenue share arrangements and whether there would be a ranking procedure whereby the best performing sites get the best ads.

The other issues that will need to be addressed include click fraud, or plain spam, as Overture prefers to call it. 'We already have a significant investment in systems to filter out fraudulent activity such as the repeated hitting of a site from a single IP address,' he said. 'We have advanced mechanics on the network to filter out unusual activity as unqualified traffic. But the smaller publishers are more likely to use the kind of techniques that involve easy detection.'