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.
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. 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.
This sites serves the UK, and links to the French and German sites are listed on the home page.
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.
Information about running paid listings on Google. The FAQ page explains how to target by country or language.
New (and apparently the first) paid listings service targeting Canada.
Chinese Search Portal Reports Interest In Paid Listings
BizReport, Dec. 18, 2001
Paid submission comes to China's Sohu.com site.
Targeting Europe - do I have to pay?
WebmasterWorld.com, Jan. 16, 2002
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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