"The combined assets position Yahoo! as the largest global
player in the rapidly growing internet advertising sector," said
Terry Semel, Yahoo!'s chairman and CEO. "Together, the two
companies will be able to provide the most compelling and
diversified suite of integrated marketing solutions around the
globe, including branding, paid placement, graphical ads, text
links, multimedia, and contextual advertising."
Within the internet advertising market, commercial search is
seen as the most dynamic and fastest growing segment, by offering
adverts that are relevant to what the user is seeking.
According to securities firm Piper Jaffray, the segment is
estimated to grow worldwide from approximately $2 billion by
year-end 2003 to approximately $5 billion by 2006, a compound
annual growth rate of approximately 35%.
Overture was the first company to make significant profits from
the commercial internet search market, notwithstanding Google's
higher traffic figures and higher profile.
Overture's system, formerly called GoTo.com, invites advertisers
to bid at auction on a cents-per-click basis to position their ads
under specific search terms. The company had more than 88,000
advertisers globally as of the end of the first quarter of
2003.
Yahoo!'s decision to purchase is not a surprise. Overture has
already been partnering with Yahoo! and providing its search
results, contributing around 19% of the portal's sales. Last week,
Yahoo! reported a doubling in its profits, paving the way for what
will be one of the biggest internet takeovers of the year, and
encouraging speculation that the sector is at last picking up
again.
Overture also powers the search results of Microsoft's MSN –
although observers predict that following the Yahoo! deal, MSN will
either switch to partnering with Google or launch its own paid-for
search alternative. Given that Microsoft has enormous cash
reserves, there has already been speculation that Bill Gates's
company might attempt to buy Google. Against that argument, some
say the world's most popular search engine, which is still
privately owned, could make even more from a stock market
flotation.
