June 18th, 2001

Searching for profits; Amid tech slump, more portals sell search engine results to highest bidder

By Verne Kopytoff
San Francisco Chronicle

At one time, you could enter a query about Albert Einstein on an Internet
search engine and be confident the top links would include his biography and
summary of his research.

These days, Internet users looking for online information about the Nobel
Prize-winning physicist may instead get pointed to a Web site selling posters,
including some of Einstein.

Once relatively objective, search engines are increasingly becoming commercial.
In an effort to survive the online industry’s financial struggles, they are
providing links based not just on relevancy, but on who pays for top billing.

Over the past several months, most of the Internet’s biggest portals have
added these so-called pay-for-placement search engines to their repertoire.
Yet in some cases, users are not explicitly told that the top links provided
to them are really advertisements in disguise.

"That is just plain unethical," said Kalle Lasn, founder of Adbusters,
a magazine based in Canada that opposes the proliferation of advertising. "It
comes to the point where I can’t feel outrage anymore."

Among the big Web sites featuring a handful of paid listings with its search
results are Yahoo, AltaVista, America Online, Ask Jeeves and Microsoft’s MSN.com.
Go.com goes a step further by featuring what is often several consecutive pages
of paid links.

A major factor behind the growth of search results for sale is the decline
of traditional online banner sales. Online companies are struggling to make
up for the loss, even if it means implementing marketing techniques they once
shunned.

HIDDEN AND NOT-SO-HIDDEN ADS

Of course, Internet search engines and portals were never really commercial-
free zones to begin with. Most of them have featured banner advertisements of
some sort since their infancy.

However, the editorial independence of search, once sacrosanct, began to erode
last year. Several online companies began charging to include Web sites in their
search results but demurred at going as far as guaranteeing placement for money.

They got over that last bit of apprehension in November 2000 when America
Online began including a handful of paid-placement links. It did so through
a partner, GoTo.com, which has since made similar deals with MSN.com, Lycos
and AltaVista.

The major portals are willing to use services like GoTo.com because they share
the advertising fees. Some portals have their own programs and collect the money
themselves.

"You have to balance the fine line between creating an optimal product
and a product that generates revenue," said Gannon Giguiere, director of
product marketing for AltaVista. "People don’t mind advertisements in certain
instances. The key is whether those advertisements are relevant."

TO THE HIGHEST BIDDER

The business side of GoTo, the most widely adopted pay-for-placement search
engine, is an auction in which advertisers compete for top placement for specific
queries. The rankings can change on the hour as companies pledge to pay GoTo
more or less each time a user clicks on their link.

EBay, for example, recently paid GoTo 16 cents per click to be the top result
for queries about Abraham Lincoln. It was followed in the rankings by Pricegrabber.com,
a shopping site that paid 7 cents for each person sent to a sales pitch for
"Abraham Lincoln," a 1930 film by D.W. Griffith.

Kevin Pursglove, a spokesman for EBay, said pay-for-placement search allows
for more targeted advertising than online banners. He conceded that many people
who enter queries about Abraham Lincoln may not be looking for merchandise,
but said they could perhaps be convinced otherwise.

"Individuals may be looking for professional research or advancing professional
goals," Pursglove said. "But they may also have a collection of Abraham
Lincoln memorabilia. It opens them up to a whole host of items."

LET THE SEARCHER BEWARE

Web sites with paid-for-placement search results vary widely in what they
disclose to consumers. They range from relatively open to ambiguous.

Among the most forthcoming is Yahoo, whose paid listings are at the top of
the page in a box titled "Sponsored." Users can click on an accompanying
link to learn that the sponsor program is "a fee-based service" that
allows some commercial sites "to receive enhanced placement."

Microsoft’s MSN is more vague about its paid listings by calling them "featured
sites." It provides consumers no other explanation.

Netscape simply calls its paid listings "partner results." IWon.com,
a portal that offers users cash prizes, did the same until a few days ago but
changed it to "featured listings" after a reporter inquired about
the earlier title’s clarity.

Danny Sullivan, founder of SearchEngineWatch.com, an online industry newsletter,
said he is not opposed to pay for placement in search results. However, he said
many Web sites should do more to inform consumers that some search links depend
on who is paying.

"I’d like to see the industry finally get together and create standard
phrases for what they call paid for placement on their sites," Sullivan
said. "Some of what they are calling it is not very clear."

Sarah Lefko, product manager for MSN.com, countered that surveys by her company
show consumers already assume search results are for sale. There is therefore
no need to spell out the details to them, she said.

Evan Thornley, chief executive for LookSmart, a San Francisco company that
plans to launch a pay-for-placement program for its online directory later this
month, said he does not care one way or the other. He compared the phenomenon
to the telephone Yellow Pages, which have allowed companies to buy more prominent
listings for years.

The ethics of selling the top three links was not brought up when LookSmart’s
managers first considered the pay program, Thornley said. He said it is simply
a matter of satisfying advertisers that are unhappy about how few people click
on banner advertisements.

IT’S ABOUT FINDING REVENUE

"We can’t afford to have ideological debates anymore," said Thornley,
whose firm licenses its directory to major portals and small Internet service
providers. "We’re a public company."

All Internet company executives interviewed were adamant that pay-for- placement
results are useful. The commercial bias of the links will help people who want
to buy products online, they said.

The Web executives added that pay-for-placement policies usually keep companies
like Nike from buying the top link for queries about Abraham Lincoln,

for example. In any case, they said it is a waste of money to try to sell
shoes to people who are clearly looking for information about another topic.

One of the biggest limits on pay for placement may be that some topics do
not readily lend themselves to marketing. After all, what big companies offer
consumer products related to obscure subjects like molecular biology and astrophysics?

"Of course, there are some categories that don’t do well," said
AltaVista’s Giguiere. "Over time, you just stop showing the ones that don’t
work."

Which is why, Giguiere said, AltaVista, like most other Web sites, also shows
search results selected impartially by mathematical equation on the same page
as results for sale. He said AltaVista will never show more than three paid
listings per page.

On the other hand, LookSmart’s Thornley was unable to think of subjects advertisers
would avoid, illustrating how widespread pay for placement may be in the future.
He initially offered Gothic cathedrals and Greek mythology as examples, but
then reconsidered after realizing travel agents could target people interested
in churches, while bookstores could market to fans of the poet Homer.

 

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