Yahoo! to Try Overture Search Results

Web portal Yahoo will make its first foray into paid search engine listings, through an agreement with Pasadena, Calif.-based Overture Services, formerly known as GoTo.com.

Beginning tomorrow, Overture will provide the technology behind Yahoo Sponsor Matches through the next six months, after which Yahoo said it would either offer its own Sponsor Matches program independently, or explore extending its contract.

As with other sites in Overture’s network — which include AOL Time Warner sites, AltaVista, Terra Lycos and others — advertisers bid for placement within specific search terms, which then appear in designated areas on the affiliate’s site. The higher the bid, the higher the advertiser’s link and text message appears in the search results.

Through the agreement, Sunnyvale-based Yahoo will publish the top five search results from Overture on every search, which is more than the industry norm — AltaVista shows three paid listings; AOL’s Netscape.com, two. But Yahoo said it would clearly demarcate the listings from its Categories directory and its unpaid search engine returns (provided by search engine Google).

In addition to its search-engine placements, Yahoo also already offers paid opportunities within its editor-selected Categories section, through a program called Sponsored Sites. Small businesses can also pay to expedite editors’ review of their site submissions for the Categories.

The deal is a major win for Overture, whose network now contains two of the top three Web portals. Microsoft’s MSN belongs to the network of an Overture rival, LookSmart.

“The category we’ve built has come a long way in the past few years,” said Overture president and chief executive Ted Meisel. “We are excited that Yahoo has chosen to add Pay-For-Performance listings to its world-class search offering. We are pleased to enter this mutually beneficial alliance and look forward to the possibility of extending our agreement with Yahoo.”

Meanwhile, Yahoo said its Sponsor Matches not only would boost its advertising revenue — since it gets a percentage of merchants’ cost-per-click payouts — but also further its efforts in providing business services.

“Millions of Internet searches conducted on Yahoo each day are commercial in nature, giving businesses tremendous opportunity to market their products and services through enhanced placement in our search results,” said Yahoo chairman and chief executive Terry Semel. “Businesses will benefit from the traction and visibility of Yahoo’s search and the high-quality results and proven, cost-effective model of Overture.”

That effort is fundamental to Semel’s Yahoo, which is trying to remake itself by adding paid-services to the already well-known advertising-sponsored content portal. Since Semel took over the helm in April, the company has rolled out Webcasting services, do-it-yourself email marketing tools, enhanced personal ad listings, and other products for small businesses, corporate marketers and consumers willing to pay.

“Yahoo Sponsor Matches is consistent with our strategy to leverage our core strengths in order to build growing and diverse revenues,” Semel said.

While Yahoo and Overture are optimistic about paid search listings, the line between paid submissions and editorial or content remains delicate. In July, an advocacy group founded by Ralph Nader sharply criticized several top portals for blurring the difference between advertisers’ links and those returned by a Web spider-based search engine.

The group, which filed a complaint with the Federal Trade Commission, singled out LookSmart, AltaVista, AOL Time Warner and several others. Overture was not named, despite its role in providing several of the sites’ listings.