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 Search Engines Hunting for New

Revenue by Selling Placement on Sites

ByScott Hertzberg  (scotthertzberg@wwwiz.com)

These are rough times for search engines. Revenues are way down. The stocks of the few public companies have nose-dived–that of industry leader Yahoo! falling from over $200 to below $15 in the past year. Alta Vista, Excite and others have issued major layoffs and one search engine, Go.com, recently closed up shop. The situation is so dire that even the most successful search engines are scrambling for new ways to raise revenues. One of the more common strategies search engines are coming up with involves offering Web site owners the option of paying to ensure that their site appears in search results.

             Nearly all the major search engines sell inclusion in their results. Paying to have your site included does not guarantee that the site is ranked high in results. However, most of the major search engines sell prominent placement in results as well.

             In 1998, GoTo became the first search engine to sell placement in search results. At the time, GoTo was the unscrupulous newcomer but the more established search engines have gradually followed its lead.  Alta Vista (www.altavista.com ) launched a paid placement program early in 2000.  Google (www.google.com) started giving prime position in results to those willing to pay in October 2000. And this past February, Yahoo! (www.yahoo.com), the last of the major search engines not to have a paid-placement program, fell into line.  Danny Sullivan, one of the leading authorities on search engines and the creator of the site Search Engine Watch (www.searchenginewatch.com), sees no problem with payment programs. ``To date, there's been little outcry against the programs," Sullivan said, ``and in fact the searching public needs to continue to support such moves. Failure to do so means that the search engines will indeed face losing one of the last lifelines they have for staying afloat."

             Payment programs are necessary to search engines' survival but certain search engines do a much better job than others at not letting payment programs compromise the quality of results or clutter things up. At Looksmart and GoTo, for instance, the top results to a given search consist of far too many paid results. At Alta Vista paid results clutter the space around the main relevancy-based results making it hard to tell which is which. The payment programs at Google and Yahoo meanwhile are fairly good models for how search engines should incorporate paid results.

             Paid results at Google and Yahoo appear atop the relevancy-based results. They are clearly marked as ``sponsored links" and placed far enough away that there is no mistaking them as the most relevant hits. ``The integrity of search results is very important to us," explains Cindy McCaffrey, vice president of corporate communications at Google. ``We are completely focused on delivering a great search experience for our users, which means not letting payments alter our results."

             In addition to keeping paid results apart from relevancy-based results, Google and Yahoo avoid cluttering their interfaces with paid results. Paid results at Google and Yahoo are limited to commercial Web sites so no paid results show up in response to searches that don't have to do with merchandise. Only one or two paid results appear atop commercial results–usually only one.

             Selling inclusion in search results is proving to be more lucrative for search engines than selling banner ads. Banner ads have long been a major source of revenue for search engines but for the past year revenue from them has fallen. The drop in revenue is partly because of the slowing economy and partly because of the fact that the ads have failed to meet the expectations of the companies buying them.

             Compared to banner ads, paid results tend to be more relevant to search terms, and because of this, searchers click on them more often. McCaffrey claims that the paid links at Google have click-through rates four to five times higher than the industry standard for traditional banner ads.

             Each search engine has a different payment program but there are basically three types of programs: paid submission, paid inclusion and paid placement. Paid submission programs only ensure that a site is indexed by a search engine. Paid inclusion programs index more pages from a Web site thus increasing chances pages from the site show up in results.  Paid placement programs as discussed above ensure that a site appears in the top results or in some other prominent location. A chart at Search Engine Watch (http://www.searchenginewatch.com/resources/paid-listings.html#seo) details the various types of payment programs employed by search engines.

             Payment programs are bound to grow in scope. For instance, it's likely that search engines may soon start charging every Web site–or at least every commercial site–a fee to be listed, much like the Yellow Pages charges every business a fee to have their phone number listed. However payment schemes develop, they will not be a problem provided that the main results to a search are still based on relevancy (as at Google and Yahoo), clutter is kept down and small business and non-profit sites are not priced out of results.

             The new payment schemes will help the better search engines weather the current tough financial conditions. Yet even the most expensive payment program will not save all search engines. For years analysts have warned that there are too many search engines offering comparable services. Even with the payment program, Sullivan predicts all but the best search engines will eventually disappear. ``Surely the end is near [for many search engines]," Sullivan predicts, ``soon we're going to be left with only a few search engines."

 Scott Hertzberg is a librarian at a federal agency in Washington, D.C. He has written several articles on the World Wide Web.

 

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