Overture's stock took a big hit earlier this month, after the news came out that Google had become the search provider for Earthlink. However, positive earnings from Overture and an extension of its deal with MSN helped the company bounce back, among analysts.
The huge drop in Overture's stock because of the Earthlink loss was probably a huge overreaction, in the same way that analysts were concerned about Inktomi, when it lost the Yahoo account to Google two years ago. In both situations, the losses were only one of many clients both Overture and Inktomi had. They were not knockout punches.
Having said this, the Earthlink deal shouldn't be glossed over, in terms of what it means for Google. It was a big win for the company, just like its win of the Yahoo account was two years ago. There is no doubt that Google will be aggressively going after some of the same distribution partnerships that Overture and others want. Google also has a strong "all-in-one" advantage of being able to provide excellent editorial results along with the ability for partners to monetize those results by carrying its paid listings.
I'll be coming back to Google's developing entry into the paid listings distribution market shortly. Until then, here's a rundown on related news articles.
As for Overture, the agreement with MSN means that its listings can be carried through. The company also says it has extended its partnership with Yahoo to run through the middle of this year.
By the way -- a quick follow-up on my article last month about Overture announcing "authorized" bid management tools. The tools are now limited to making bid changes only six times per day, though bids can be manually changed as often as desired. And so far, unauthorized tools have not been locked out. Overture is still negotiating with some of the makers of unauthorized tools, and the implication is that blocking won't happen while negotiations continue.
Overture surprises analysts, extends MSN deal
News.com, Feb. 12, 2002
Details on the highs and lows Overture's had this month, dealwise. Interesting stat that MSN and AOL accounted for 40 to 50 percent of Overture's revenue, last quarter. One analyst also expect Overture's international revenue to be "meaningful" by 2004 and account for 27 percent of revenue by 2006.
Overture Enhances Contract with MSN
InternetNews.com, Feb. 12, 2002
More details on the MSN deal.
Overture: Who needs EarthLink?
News.com, Feb. 7, 2002
Overture dismisses the Earthlink loss as having a significant impact on its business, and one analyst put it at producing only 2 to 3 percent of Overture's business. Instead, it's MSN, Yahoo and AOL that are seen as key players in keeping the company's distribution strong. The MSN and Yahoo deals were tightened, after this article was written. AOL remains expiring in March.
Google challenges pay-for-play search
News.com, Feb. 5, 2002
Quotes from Overture and Google about the Earthlink deal.
Google Ousts Overture At Earthlink, Begins Ad Distribution
The Search Engine Report, Feb. 4, 2002
My article about the Google-Earthlink deal, and why it is so significant.
Europe's Paid Placement Warriors
The Search Engine Report, Feb. 4, 2002
The first story referenced above mentions one analysts rosy expectations for Overture's international growth. This article look at what's happening in Europe, where Overture faces substantial competition for deals in the form of Espotting.
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