LookSmart under pressure as Yahoo completes Overture - News - Business

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This story was printed from ZDNet Australia.
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LookSmart under pressure as Yahoo completes Overture

By Andrew Colley, 0
October 08, 2003
URL: http://www.zdnet.com.au/news/business/soa/LookSmart-under-pressure-as-Yahoo-completes-Overture/0,139023166,120279422,00.htm

Yahoo's announcement today that it has successfully completed its acquisition of commercial search provider, Overture Services, has could cast doubts over its relationship with LookSmart in Australia.

LookSmart has been providing paid listings to Yahoo's Australian and New Zealand portals since April 2002. However, today's announcement may signal the end of the partnership, increasing the company's woes after it announced yesterday that it had lost a lucrative deal to provide paid listings to Microsoft's US online portal spin-off, MSN.

LookSmart's partnership with nineMSN in Australia will continue indefinitely.

Yahoo Australia and New Zealand has begun contemplating its strategy to merge the two businesses in earnest after the shareholders yesterday rubber-stamped the acquisition.

Yahoo Australia and New Zealand managing director, Cliff Rosenberg, was today non-committal when it came to forecasting how the merger would impact its partnership with LookSmart.

"We're going into planning stage now and looking at the consequences of the acquisition -- I really am not in a position to say more," said Rosenberg.

According to reports, the original deal guaranteed LookSmart Australia the right to include up to three non-bid-based, pay-per-click listings alongside Yahoo search results until at least March 2003.

Rosenberg refused to comment on the current status of the deal on the grounds that the terms of the agreement between LookSmart and Yahoo Australia and New Zealand were held in commercial confidence.

Bruce Maxwell, chief executive officer of search placement and optimisation consultancy, WebSight, indicated the decision would at the very least be unpopular with locally based companies, if Yahoo offered Overture listings in an unmodified form.

"I'd say that they'd be shooting themselves in the foot...unless it was clearly Australian results from the Overture databases I know we certainly wouldn't recommend it," said Maxwell adding:

"We'll push [Australia specific search engines] before we push anything else".

Maxwell argues that Overture would have to filter its current database -- which encompasses US and global search listings -- before it could begin offering paid listing services in Australia.

Overture Services, which boasts over 100,000 advertising clients, has already opened its operations in Australia. It provides commercial search listing services for MSN, AltaVista, Lycos and Yahoo in North America.

According to Internet research group, Jupiter Research, Australia's paid search market is expected to grow 86 percent annually to reach approximately AU$64 million by 2005.

Advertiser listings sourced from Overture's commercial search placement services in accounted for about 20 percent of Yahoo!'s revenue last quarter. The acquisition deal is valued at US$1.63 billion.