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Europe's Paid Placement Warriors

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Paid placement listings on search engines in the United States are by now well established, and the clear leader there is Overture. By opening a single Overture account, you can get guaranteed placement on every popular search engine but Google.

Now things are heating up in Europe, and unlike in the US, Overture faces competition for major partners in the form of United Kingdom-based Espotting.

Espotting's success against Overture is unprecedented, when you compare it to the US experience. The only Overture competitor in the US to ever win a major search engine partnership was FindWhat, which picked up a deal with Excite last April. However, that deal ended in the wake of Excite's bankruptcy and sale to InfoSpace.

In contrast, Espotting won out against Overture for the Yahoo Europe account last month. It also picked up a deal with Lycos Europe last September. That's two major wins for Espotting against Overture.

The initial thought is that Overture's European plans are in trouble. After all, Overture partners with Yahoo and Lycos in the US, so how could it fail to get them in Europe? However, Overture Europe has had its own recent successes. Last month, it was named the paid listings provider to AOL Europe, and in December, it began quietly feeding paid listings at MSN UK in what's described to Overture UK advertisers as a "test agreement."

What gave Espotting the edge with Lycos and Yahoo? Though several factors were considered, both companies cited that Espotting offered a more lucrative package.

"It was a better deal for Yahoo to be with Espotting," said James Bilefield, Yahoo UK & Ireland's business development director.

Lycos Europe said likewise, that it was going to do better commercially by going with Espotting. Neither Yahoo nor Lycos Europe would reveal terms of their deals, however.

Overture Europe admits that Espotting may have offered great deals to Yahoo and Lycos Europe, but it also suggests that as a private company, Espotting is able to take risks that publicly-owned Overture it can't take nor wants to take.

"We're building a long-term sustainable business thats going to deliver growth back to our shareholders," said Nick Hynes, managing director and president of Overture Europe. "We have to be a business that is based upon real business fundamentals."

Hynes wouldn't comment on what he thought the terms of the Yahoo and Lycos deals were. Instead, he only would say in general that "we do not do margin negative deals." Of course, the suggestion is that Espotting is losing money on these deals in order to get them, in hopes of making them pay off later.

Espotting completely rejects such a suggestion. "We're obviously not in the business to subsidize someone. We are in it to make money," said Daniel Ishag, founder and CEO of Espotting. Ishag says the company also recently turned cash flow positive.

Ishag says that Espotting was able to offer better deals to Lycos and Yahoo because it because it can serve results to more of the properties they own. This year, Espotting intends to be able to feed paid listings for five different major European countries, while Overture will feed only two or three. Those extra countries mean that players such as Lycos and Yahoo can power more of their properties with Espotting paid listings, and thus earn more, Ishag says.

Ishag also added that his company has internal structures he says allows it to process listings with fewer editors than Overture yet still maintain quality.

It's important to note that neither Yahoo nor Lycos Europe said that money was the only thing involved in their decisions. Also important to both companies was the perceived relevance and quality of the paid listings. In these factors, both Espotting and Overture were seen as meeting their required standards. Given this, the terms of the business deal could then become more decisive.

"When it comes to paid for links, we require a certainly level of quality in terms of relevancy, but then it is a commercial opportunity for us," said Alex Kovach, managing director of Lycos UK & Ireland.

Another important factor is geographical distribution. Overture is currently only live and serving ads in the UK. In contrast, Espotting is serving France and Germany, in addition to the UK. This made it attractive to Yahoo, who wanted a partner able to quickly place listings on the various country-specific sites it operates.

"They were live in the UK, France and Germany today," said Yahoo's Bilefield. "Espotting better suited our needs, in that we wanted to do a main deal for all of our European properties."

Espotting listings are currently running on Yahoo UK and are supposed to go live on Yahoo Germany this week, Bilefield said. Yahoo France follows with live listings in March. Yahoo Italy and Yahoo Spain should get paid listings in the middle of the year, when Espotting opens sites serving those markets.

In contrast to Espotting's plans, by the middle of this year, Overture will probably only have sites serving the UK, Germany and France. The Germany site is expected to go live within weeks, while there's no scheduled date for the French site at all.

Overture says it is not worried about trying to rapidly expand the number of European countries it serves. Instead, the company wants to target where potential revenue is deemed the best.

"Im sorry, just because someone wants us to sell in Liechtenstein, theres no money to be made in Liechtenstein, and I have to build a sustainable business," Hynes said. "We will not go for being pan-European," he said.

Germany is expected to be a money maker, and the Overture distribution has already been seeded especially though a deal made in December, with T-Online, a major German ISP and portal that reaches over half the German web users. The AOL deal for Germany is also to go live in April 2002, and Overture says there are more on the way.

"We aim to be the number one there. We are announcing a big deal in Germany next week, and we have three or four weeks worth of interesting announcements with Germany coming," Hynes said.

So what countries will be next for Overture? After France would come Italy, then Spain, then perhaps Sweden, Hynes said. However, there's no schedule set for any of these countries.

Espotting also thinks Germany will be big, and the company is well positioned to do distribution there. Its listings already show up on Lycos Europe-owned properties such as Lycos Germany, HotBot Germany and Fireball, and reach will expand further when the Yahoo Germany listings begin this week.

In France, Espotting is live on Lycos France, HotBot France and AltaVista France. In addition, new sites for Spain, Italy and Austria are to open later this year. Espotting is also considering licensing its paid listings management technology to others in countries where it doesn't plan to begin operations, Ishag said. The company is also taking its first steps outside Europe and targeting Japan.

"Weve got people on the ground in Japan right now," Ishag said. "Were hoping to have operations there within the next four months."

I think a wildcard in the European battle will be Google. Pick your country, and Google has a substantial usage there. The company can also deliver geographically targeted ads and is planning to distribute these ads to other companies. If Google moves forward, what's been a unique two player race in paid placement in Europe may turn into a three-way fight.

How about getting started with paid listings in Europe? If you want the broadest reach, you'll probably want accounts with Espotting, Overture, and Google. How the first two compare is shown below on the chart, country-by-country. All references are to the country-specific version of the search engine shown. In other words, AltaVista means AltaVista UK in the UK column and AltaVista France in the France column.

Site UK Germany France Spain Italy
Overture AltaVista
AOL
(by 2/02)
Ask Jeeves
Freeserve
MSN
AOL
(by 4/02)
T-Online
AOL France
(no date set)
n/a n/a
Espotting Ask Jeeves
Excite
HotBot
Lycos
UK Plus
Yahoo
Fireball
HotBot
Lycos
Yahoo
(by 2/02)
AltaVista
HotBot
Lycos
Yahoo
(by 3/02)
Yahoo
(by Mid-02)
Yahoo
(by Mid-02)
Notes Excite UK no longer exists, but there are still plenty of links to the site. Traffic is redirected to Lycos UK.

Ask UK features Espotting results much more prominently than Overture's.

Provider to AltaVista Germany has yet to be announced.

Keep in mind that if you want to show up in a particular country, you need to have an account with the appropriate edition of Overture or Espotting. In other words, to be in the UK, you want to be listed with Espotting UK and Overture UK. To show up in Germany, you want to be listed in Espotting Germany and Overture Germany. Want to be in them both? Then you need to have two separate accounts.

While the chart is helpful in showing which major search engines are served with paid listings from Overture or Espotting, you also need to consider three major issues not reflected on it: reach, the ISP factor and the .com factor.

Reach

It can look impressive to have a long list of names that you distribute on, but those names don't mean anything if they fail to provide you much reach. For example, AltaVista is a well-known name in the search engine world, so saying that you provide paid listings to it sounds pretty impressive. However, the search engine's share of various European audiences has fallen dramatically over the past year.

Indeed, as of October 2001, AltaVista UK served only 4.6 percent of the UK web audience. In contrast, the Yahoo UK site had a reach of 20.4 percent, according to figures from Jupiter MMXI.

As a rough guide to how important the relationships listed are, see the Jupiter MMXI European Search Engine Ratings page, where reach for various countries is shown.

The ISP Factor

In Europe, Internet service providers are much more important as potential traffic sources for search engines than in the US. Many Europeans will go online through relatively few providers. They will also be directed to the ISP's home page, where search is offered.

A good example is Freeserve, in the United Kingdom. It allows significant numbers of people to go online without paying an access fee. These people have the Freeserve home page load as their start page by default, and they do seem inclined to run searches from it. That means they encounter Overture's paid listings.

The chart above only shows two ISPs on it: Freeserve and T-Online, as these are both ISPs that I know well. Other important ISPs may be served by either paid listing provider, extending their potential reach.

The .com Factor

Despite the presence of sites such as Yahoo UK or AltaVista France, many Europeans still gravitate to the US-based editions of these services, such as Yahoo.com and AltaVista.com. This means that they may see a different set of results. You can see how likely this is by reviewing the Jupiter MMXI ratings page, mentioned above.

For example, anyone going to a major search engine in the US is going to see listings from Overture US, with the exception of Google and Yahoo, which will be explained more below. Because of this, if you want to reach Europeans, you might need to experiment with running ads on Overture US, even though the distribution of these ads will be in the US.

Yahoo is a bit different. It runs Overture US ads on the Yahoo.com site, but these are only seen by those who access the site from within the United States and Canada. Europeans accessing these sites are not seeing any paid listings at all.

Yahoo's US management has said that it expects to have an internal paid listings program in place to take over from Overture by April 2002. This internal system would also have the capability to run geographically-targeted ads on Yahoo.com. When and if this really happens, then the paid listings black hole for Europeans reaching Yahoo.com may be corrected.

By the way, Yahoo Europe says that the deal with Espotting is set to run for 12 months. It could end sooner, especially if the Yahoo US internal solution is rolled out to other Yahoo properties. However, that may not happen at all.

"Yahoo [US” still plans to build its own internal solution," said Yahoo UK's James Bilefield. "That may or may not be rolled out internationally, and we may or may not choose to use it."

As for Google, it delivers geographically-targeted ads. For example, those going to Google.com from the UK will see different ads than those visiting the site from within the US. Because of this, you'll need to work with Google to ensure that your ads are targeted appropriately.

Espotting
http://www.espotting.com

This sites serves the UK, and links to the French and German sites are listed on the home page.

Overture UK
http://uk.overture.com/

This site serves the UK. Use the "International" button at the top of the home page to reach the US site or gain information about the planned German site.

Google AdWords
https://adwords.google.com

Information about running paid listings on Google. The FAQ page explains how to target by country or language.

Canadaspace.com
http://www.canadaspace.com

New (and apparently the first) paid listings service targeting Canada.

Chinese Search Portal Reports Interest In Paid Listings
BizReport, Dec. 18, 2001
http://www.bizreport.com/article.php?art_id=2671

Paid submission comes to China's Sohu.com site.

Targeting Europe - do I have to pay?
WebmasterWorld.com, Jan. 16, 2002
http://www.webmasterworld.com/forum18/369.htm

If you are looking for more guidance on submitting to European countries, you'll find advice from those in the trenches in this thread.


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