Online ad sites challenge Google, Yahoo

Online ad sites challenge Google, Yahoo

Posted 2/5/2007 9:06 AM ET

SAN FRANCISCO — Like thousands of other websites, relies on Google to handle a lucrative piece of Internet advertising — the briefly worded links that produce revenue-generating clicks by targeting each individual reader's interests. The relationship has been profitable so far, but the managers of the technology website believe they could be making even more money if Google's system stopped serving up ads about potato chips or poker chips when a visitor is reading an article about computer chips.

"We think we could extract more value from our advertising by not mixing potato chips with computer chips," said Stephen Baker, who oversees search-based advertising for EDN and dozens of other websites owned by London-based Reed Elsevier Group PLC.

Although he has no plans to drop out of Google's network, Baker said he may try out a new advertising alternative being announced Monday by Fast Search and Transfer, a Norway-based company that specializes in providing search tools for businesses.

Fast is marketing its platform — dubbed AdMomentum — as a one-stop solution for websites that want to become less dependent on Google and the other large advertising networks operated by Yahoo and Microsoft.

"It's like a digital marketplace in a box," said Sue Feldman, an IDC Research vice president who reviewed early versions of AdMomentum. "This gives websites an opportunity to become more independent and take more control over their revenue stream."

More money is rapidly flowing into "keyword advertising" — the industry's description for the intuitive algorithms that quickly analyze search requests or other content displayed on a Web page before deciding which marketing messages to show.

Annual spending on keyword ads is expected to top $10 billion in 2010, up from $6.8 billion last year, based on estimates from eMarketer, which tracks the industry.

With more money at stake, Fast is betting websites will be increasingly interested in developing their own ad systems so they won't have to share revenue with Google and the other networks.

"Publishers are not going to want another hand in their pockets every time they are selling ads," said Perry Solomon, Fast's vice president of strategic market development. Solomon declined to discuss AdMomentum's pricing model.

Some websites already have embraced alternative channels. In one of the biggest examples so far, Walt Disney's dropped Yahoo as its advertising partner in September to sell the commercial links on its own, using a platform called AdSonar offered by New York-based Quigo Technologies.

AdMomentum figures to face an uphill battle in a market dominated by some of the world's most influential technology companies.

Mountain View-based Google looks particularly imposing, having raked in $20 billion from online advertising during the past three years. The company shared $6.7 billion of that amount with its advertising partners.

Yahoo has spent the past two years tweaking its system so it does a better job of matching its marketing messages with readers' interests. The Sunnyvale-based company plans to unveil the long-anticipated improvements Monday.

This isn't the first time Fast has challenged Google and Yahoo. For several years, it ran a general-purpose search engine called that never made a dent in the market.

Fast wound up selling AlltheWeb and several other affiliates in 2003 for $100 million to a company that was eventually bought by Yahoo. AlltheWeb now serves as a testing ground for Yahoo's alternative approaches to search.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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