Espotting on the Overture/Fast deal

Pay-per-click text ad provider Overture has bought the AltaVista and Fast Web search engines. So what is a competitor like Espotting to do?

(February 26 2003) This is like a game of chess. The players are trying to predict what the opponents are thinking in order to stay one step ahead of them, and if they fail, make a new move to limit the damages.

The preferred tactic now seems to be to combine the role of search results provider and pay-per-click text ad distributor. This is what Google is doing and this is what Overture has achieved by taking over the AltaVista search engine.

One likely explanation for Overture's acquisition of Fast's Internet business unit (see separate story) could have been to stop others from doing the same. Overture does not really need two search engines (AltaVista and Fast), but the company has stopped the European pay-per-click service Espotting from buying one or the other.

Now it is Espotting's move. In a press release Jonathan Bunis, Espotting Media's COO, points out that by having its own search portals (AltaVista and Fast's AlltheWeb) Overture is directly competing with its own customers (i.e. the sites presenting Overture text ads).

Espotting points out that their company is now the only "truly independent pay-per-click player in Europe." This opens up opportunities with new affiliate partnerships.

Espotting claims they have already received calls from companies who are fearful about continuing their working relationship with Overture, meaning that there are European search sites and portals out there that are considering switching from Overture to someone else.

What can Overture do about this? Well, they can point out that their deals with Fast and AltaVista really do not matter that much. After all Google is doing the same, having their own search site and at the same time delivering search results and text ads to others.

Overture can also argue that their combined package of pay-per-click text ads and search results is a cost efficient alternative. And there is still competition. After all, the search portals can switch over to Google. There is no monopoly.

Overture may also choose another tactic. They can point out that AlltheWeb has always been a showcase search site, never a true competitor to other portals. By marketing AltaVista as an experimental site, they can also downplay the threat of that old timer. AltaVista does not generate that much traffic anyway.

Espotting's main concern can be found in an addition to the company press release. Read the following paragraph carefully:

"Espotting celebrates its 3rd birthday on 28th February. We now operate in 10 European countries, delivering targeted leads to over 14,000 advertisers by powering 700million searches a month through our partnerships with site such as Yahoo! Europe, Lycos and Ask Jeeves. Our relationships with FAST and AltaVista are ongoing across Europe."

"Our relationships with FAST and AltaVista are ongoing". Well, what if they are not? What if Overture decides that Fast and AltaVista search results shall be combined with Overture text ads only? Then the only viable alternative to Overture becomes Google, and Espotting is left out in the cold.

Hence Espotting desperately needs a search engine partner in order to gain room for manouvre. Unfortunately nearly all of them are taken:

• Overture owns Fast and AltaVista
• Yahoo! -- a company that is considering their own pay-per-click service -- owns Inktomi
• Google owns -- well --- Google and has its own pay-per-click offering called Google Adwords
• Pay-per-click company LookSmart owns the Wisenut search engine

Espotting could consider joining forces with LookSmart, developing a new global paid listing alternative. Or they could form an alliance with Ask Jeeves, the only major independent search engine company left on the planet. Ask Jeeves owns Teoma, a search engine that could possibly (although not very likely) become an alternative to Fast or Google.

The plot thickens!

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