February 28th, 2002
We Get What They Pay For
By Leslie Walker
Behold the soul of a search engine. It appears to be available to the highest
Ever since Internet advertising slowed, halting revenue growth at the Internet’s
top networks, pressure has been building on Web companies to sell advertisers
prominent placement in the results their search engines generate.
Once it was unthinkable that companies could buy their way to the top of the
listings produced when you type in a phrase like "digital cameras."
But advertisers’ bargaining power has increased in proportion to the decline
in the economy, helping them claim a choice piece of digital real estate.
Today most Internet networks present paid listings at the top of their search
result pages in a format closely resembling the regular listings below. Many
even let the amount of an advertiser’s bid dictate how high a listing appears.
Type in "George Bush" at big Internet gateways, for instance, and
the top matches are likely to be links to eBay and Amazon.com. That’s because
eBay and Amazon lately have been top bidders for the George Bush "keyword,"
offering 11 cents and 10 cents, respectively, for each click-through a search
engine delivers. In return, eBay gets to present a ridiculous link that says,
"You can find George W. Bush right here!" Clicking on it leads to
a list of cheesy items for sale on eBay, the first being a fake $2001 bill imprinted
with George W.’s face.
You might wonder why the first matches to your search terms are often the same,
regardless of whether you search at Microsoft Network, Yahoo, America Online
or Terra Lycos. That’s because the top four networks do not operate their own
search engines; they employ other firms to deliver both their unpaid search
results and sponsored links. In recent months, all four have been using paid
search listings from the same company, Overture Services Inc.
Overture currently is the most successful Internet ad network. It reported
$288 million in revenue last year and turned a profit, a rarity for Internet
ventures. As an incentive to show its paid listings first, Overture forked over
more than half of its ad revenue to sites displaying its results.
In fairness, most portals attempt to separate their paid listings from their
unbiased search results with labels. Terra Lycos calls paid links "sponsored
sites," AOL "sponsored links." Netscape labels them more ambiguously
"partner search results." But Dogpile.com and others don’t even hint
that their paid results are less than objective, presenting them under the misleading
label "search engines."
Still others mix Overture’s links with ones from their own advertisers and
use a mishmash of labels.
This ambiguity led consumer watchdogs to complain to the Federal Trade Commission
last year that paid search listings are misleading Web surfers and could be
construed as deceptive advertising. The case has yet to produce a public response
from the FTC.
It remains to be seen whether pay-for-placement represents a temporary response
to the drop in Internet ad sales or a more fundamental shift in the nature of
online searches. The Internet, after all, serves many masters. Its role as the
world’s largest library is generating increasing tension with its function as
a directory for global commerce.
Ted Meisel, Overture’s chief executive, sees the tension as part of the Internet’s
natural evolution. The process for searching the Web is evolving in the same
way telephone directories did, he said, with enhanced listings helping people
find commercial goods and services.
"Yellow pages pay for the printing and distribution of white pages,"
he said, adding that paid listings do the same online and can be as useful as
yellow-pages ads, at least when people are looking up commercial subjects.
But executives at the Internet’s top-rated search engine, Google, disagree
with the way Overture is going about it.
"Overture is a giant database of ads, not a search engine," said
Tim Armstrong, Google’s ad sales director.
In what is shaping up to be a feisty battle, Google is taking aim at Overture
by trying to sell its own paid listings, along with regular unaltered search
results. It also is trying to ensure that any paid listings not appear unless
they have a reasonable connection to the search request.
Google hopes its ability to offer both kinds of results will help it unseat
Overture as the preferred keyword-ad network for major Web gateways. Since Overture
has no Web-wide search engine, its clients turn to other providers such as Fast
Search & Transfer and Inktomi Corp. for basic search results.
With 53,000 advertisers, analysts give the edge right now to Overture, but
Google says it has signed on "tens of thousands of advertisers" and
is catching up fast. This month, for instance, Internet access provider EarthLink
ditched Overture and signed with Google to show two kinds of listings to EarthLink
subscribers—paid and unpaid ones.
"The bottom line is users don’t come to us for advertising, they come
to us for information," Armstrong said. "There is a clear distinction
between the two."
Google alone among the top search services has vowed not to collect fees from
companies to guarantee them inclusion in searches. By contrast, AltaVista, Inktomi
and Lycos all charge fees in return for inclusion and sometimes favorable treatment
in their Web indexes.
Google also said money alone would not dictate placement, even in its paid
links. The rate at which users click on a paid link also will be part of its
formula, the idea being that the more relevant the ad, the more clicks it should
generate, and therefore the higher it should appear in the results.
So weep not for the soul of the search engine, at least not yet. While the
trend toward paid placement is worrisome, it may be a necessary evil as the
Internet seeks a balance between the needs of pure research and commercial services.
There is still a chance that those search engines presenting the most relevant
returns and labeling them honestly will prevail.
In which case, the highest bidders may wind up being you and me.
- Posted by Scott Leonard on October 17th, 2005
- Posted by Don on October 19th, 2005