Re: AltaVista Testing Paid Search Results

From: Jeffrey Brewer <jeffrey_at_goto.com>
Date: Wed, 21 Apr 1999 14:51:07 -0500 (CDT)

Hi Folks,

Alta Vista's "partial" adoption of GoTo.com's
pay-for-performance advertising model has caused quite a lot
of posts in the Online-Ads list. We felt it was a good
opportunity to let you all know how we feel about their
decision and why their actions don't go far enough to
benefit users!

WHY GOTO.COM'S MODEL DELIVERS RELEVANT RESULTS

As most of you are aware, search results on the GoTo.com
service are rank-ordered through a competitive bid process
throughout the search results (not just the top 2 spots)
whereby each advertiser's bid represents the amount it will
pay GoTo.com for each consumer click-through. The advertiser
with the highest bid is listed first in the search results,
with the remaining advertisers appearing in descending bid
amount order. Since advertisers must pay for each
click-through to their Web site, advertisers select and bid
on those search terms that are most relevant to their
business offerings, which leads to relevant results for
consumers.

Because GoTo.com allows all sites to compete fairly and
equally, regardless of the size of their budget, the search
results on GoTo.com are diverse, deliver the breadth of the
Internet, and are relevant to users. Since a Web site can
often times bid as low as $.01 on many search terms and
still be on the first page of results, smaller sites can
compete in the same space as the large, well-branded sites,
making the search results as diverse as the Internet itself.

GoTo.com believes that its pay-for-performance advertising
model aligns advertiser and consumer interests.
Specifically, GoTo.com can provide more relevant and higher
quality search results by assigning a cost to advertiser
placement decisions, thereby using a free and open market as
the most efficient filter for relevancy. The free market
does a better job sorting for relevancy over the long run
because, for any given keyword, sites who craft the most
accurate titles and descriptions for their listings in the
results, and who offer the most compelling consumer
propositions and the most effective consumer experiences,
will have the higher conversion rates. They will therefore
be willing to pay more for transfers of targeted,
self-qualified leads.

What Alta Vista's new offering does is add two advertising
places without allowing the free market to affect the
relevancy of the search listings. To allow the free market
to sort for relevancy and deliver more relevant results, a
search engine has to do it all the way or not at all.

Our approach has born out to indeed provide the most
relevant results. In an independent online consumer survey
recently conducted by NPD Online Research at both the end of
1998 and the beginning of 1999, GoTo.com ranked ahead of all
of the major search engines, including Yahoo!, Alta Vista,
Excite, Lycos and Infoseek in the category "frequency of
finding information sought every time."

But don't just take our word for it. Try a few searches and
compare the relevancy, speed, and simplicity of searching
with GoTo.com. Like the rest of the search industry, not
every search on GoTo.com may meet your expectations, but
when evaluating relevancy, you should search across a number
of search engines with a number of different keywords. Then
let your own experience be the judge.

THE BEST PLACE FOR SMALL- AND MEDIUM-SIZED ADVERTISERS TO
GET ONLINE VISIBILITY

Another question raised in the conversations about GoTo.com
is whether small- and medium-sized businesses get pushed out
by large advertisers. Any advertiser is able to participate
in the GoTo.com marketplace. In fact, GoTo.com provides the
most effective way for small- and medium-sized businesses to
advertise online, because: 1) GoTo.com does not enter into
exclusive advertising arrangements, thereby enabling access
to the marketplace by all potential advertisers; and 2)
advertisers maintain control on a real-time basis over the
amounts of their bids for keywords they have selected and
the aggregate amount spent on advertising with GoTo.com. As
a result, they are able to precisely control their costs of
customer acquisition using the GoTo.com service.

Alta Vista started opened bidding on select keywords to
select customers at $.25, GoTo.com starts at $.01 on any
keyword, to any advertiser.

WE DIDN'T INVENT PAID PLACEMENT IN SEARCH ENGINES

Another set of questions revolves around whether search
engine optimization companies will be put out of business by
the "commercialization of search." We contend that the
search optimization companies are primary perpetuators of
paid placement in search engines, because they accept fees
to utilize a variety of tactics to ensure that Web sites get
placement. This does not seem conducive to "pure" search
results from our point of view.

We don't think search engine optimization companies will go
out of business at all. The entire search industry appears
to be pay-for-placement now because of them. We think they
could be kept busy by selecting search terms, crafting
well-written titles and descriptions, and managing the bids
and the accounts for their clients on "pay-for performance"
search engines. They will also be able to ensure their
clients of many more qualified leads at a lower cost of
acquisition, and it will be time better spent than
constantly trying to keep up with the algorithm du jour.

While we are on the topic of paid placement, it is
interesting to note two additional manifestations for paid
placement in search engines. We have already spoken about
one of these, which is the exclusive advertising placements
which many of the search engines offer to content providers.
And most recently, Yahoo! has seemingly moved into paid
placement, offering a new service to expedite the review of
sites for $199. Both of these paid placement models are 1)
large advertiser-centric, and 2) in direct conflict with
providing the "pure" search results or results with full
disclosure explaining these placements. We would suggest
that all advertisers, small and large alike, take that $0
and place bids on keywords on GoTo.com, where they could get
up to ,000 clicks if they bid $0.01 per click

CLOSING COMMENTS

We hope for the benefit of Alta Vista's users that they come
around to the completely open process embraced by GoTo which
allows all positions to be bid for - a process which we
think yields the most relevant results for consumers and
allows consumers to see the actual prices that advertisers
pay for their listings.

Jeffrey Brewer | President & CEO | GoTo.com

140 West Union Street | Pasadena, CA 91103
Tel: 626-685-5610 | Fax: 626-685-5601

www.goto.com - Search Made Simple


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Received on Wed Apr 21 1999 - 15:48:33 CDT