Overture Extends MSN Deal Abroad

Despite frequent predictions of its demise, Overture Services and MSN’s partnership was strengthened Monday, when the companies announced they would extend their paid listings deal for browser search in six countries and add Web search in Italy.

Under terms of the new agreement, Overture will continue to provide paid search listings on MSN Search in the United Kingdom, France, Germany, Italy, Japan and South Korea until December 2004. MSN Search is available through Microsoft’s Internet Explorer browser software. The original agreement was to expire in December 2003. The extension brings the agreements in line with Overture’s domestic deal with MSN, which is set to expire in December 2004.

MSN also signed Overture to provide paid search services on MSN’s Web site in Italy. Overture officially launched its Italian operations in May.

“Overture is an integral part of MSN’s search development and continues to create unique, customized solutions that enrich the consumer search experience,” Christopher Payne, MSN.com’s vice president, said in a statement.

Overture provides three paid listings on the results page for searches on both MSN Search and MSN Web sites.

The expansion of the MSN relationship is important for Overture, which counts on MSN and Yahoo for about two thirds of its revenues. MSN has said publicly that it is investing heavily in developing its own search capabilities, while stressing that it has no intention of replacing Overture with a homegrown paid search solution.

Despite the demurrals, Overture has been plagued by doubts of the relationship’s long-term viability. In April, Soundview Technology Group analyst Jordan Rohan sent Overture’s shares into a tailspin with a research report that predicted both MSN and Yahoo would defect. Overture arranged for MSN officials, who are normally reticent to comment on market rumors, to deny any designs on building paid search functions.

Overture has provided paid listings domestically on MSN since 1998. Overture is contracted to provide paid listings on MSN’s search sites until December 2004; the Internet Explorer search deal ends a year earlier.

This already thriving international relationship could grow even further, as Overture is poised to open operations in three new European markets before the end of the year.

CEO Ted Meisel has said Overture would speed up its international expansion, despite the short-term costs that would keep earnings flat in the first half of 2003.