Google Scoops Up Applied Semantics

Search engine upstart Google Wednesday said it has acquired Applied Semantics (formerly known as Oingo) for an undisclosed amount.

The move gives it technology to improve its content-targeted ad programs, and takes away from rival Overture one of its affiliates.

Santa Monica, Calif.-based Applied makes software applications for the online advertising, domain name and enterprise information management markets. Mountain View, Calif.-based Google said it would use Applied’s technology to improve the relevance of ads served in its content-targeted advertising programs, such as its Sponsored Links Program.

The deal is significant considering Applied is a top ten affiliate (based on revenue) and technology partner of Google’s paid search advertising competitor Overture. Overture’s partnership with Applied was set to expire in August 2004. The purchase is yet another blow to Overture at a time when it’s already had to revise its full-year revenue forecast down, cutting its original projections in half.

The acquisition may be aimed at quelling murmurs within the online advertising industry that sponsored links served on other sites’ content pages, rather than on Google’s own search pages, aren’t as effective at meeting marketers’ click-through and conversion goals. It’s an important factor for Google to consider as its strategy with regard to paid search increasingly revolves around having its listings served on sites other than its own, as it strives to increase reach. Google’s advertisers, which it numbers at more than 100,000, have the option of opting out of having their ads served through the content-targeted program.

“Applied Semantics is a proven innovator in semantic text processing and online advertising,” said Google co-founder Sergey Brin in a statement. “This acquisition will enable Google to create new technologies that make online advertising more useful to users, publishers, and advertisers alike.”

Google said the Applied Semantics team will remain in Santa Monica, where Google will establish its Southern California product development center. Google also recently opened an East Coast engineering office in New York City.

Applied Semantics’ products are based on its patented CIRCA technology, which understands, organizes, and extracts knowledge from Web sites and information repositories in a way that mimics human thought and enables more effective information retrieval, the company said. A key application of the CIRCA technology is Applied Semantics’ AdSense product that enables Web publishers to understand the key themes on Web pages to deliver highly relevant and targeted advertisements.

CIRCA is a core component of customer relationship management software. The technology is based on an ontology that consists of millions of words, meanings, and their conceptual relationships to other meanings in the human language.

With the help of the Open Directory Project (ODP) Applied says the technology gives businesses the power to generate metadata and taxonomies, categorize content, summarize and search for information, to realize optimal value from their knowledge assets.