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Overture and Search

March 3rd, 2003 · No Comments

The most successful search company is – maybe hard to believe – is Overture. We may search at Google, but Overture makes more money. It has a simple business model: it sells search terms to the highest bidder. Recently, it bought AltaVista and the Web search division of Norway’s Fast Search & Transfer. News.com has more:

Overture began as the brainchild of Bill Gross, whose start-up investment company, Idealab, incubated one-time Internet highfliers like eToys. He founded the company as GoTo.com in September 1997 and a year later, launched its search advertising service with results appearing on GoTo.com and partners including Netscape Communications.

Unlike most of Gross’s ideas, Overture has not only survived but thrived: This year, the company expects to generate more than $1 billion in revenue, up from $667 million in 2002. By contrast, some analysts estimate that privately held Google likely took in around $300 million in revenue.

The company compares its service to the Yellow Pages, the phone book that offers a useful resource even as it serves the marketing goals of its advertisers.

The company claims its goal is to create a win-win situation for customers and Web surfers, enforced by self-interest. Because advertisers are required to pay a fee each time someone clicks on one of their links–a practice known as pay for performance–companies are discouraged from misleading readers.

I was among the skeptics of Overture (then GoTo). But I’ve been proved wrong. Now, as consolidation in the search business is underway (Yahoo recently bought Inktomi), it is interesting to see how the various players (including Google) evolve.

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