Web sites to bid for placement on Google
By Michael Liedtke
Associated Press
SAN FRANCISCO — Popular online search engine maker Google Inc. is introducing a new program that allows Web sites to be displayed more prominently by paying more money — an advertising-driven system derided by critics as an invitation to deceptive business practices.
Under a feature scheduled to launch last night, the rankings of a search engine devoted to advertisers will be determined in part by how much Web sites offer to be listed in specific categories.
The system lets Web sites raise their bids to increase their chances for higher placement on the section of Google's site that's devoted to sponsored links.
Besides factoring in Web sites' bids, Google's ranking formula will consider how many times visitors click on the displayed links — a departure from other so-called "pay-for-placement" search engines.
Mountain View-based Google will continue to reserve most of its site for results sorted by relevance to a search request — a model that has cultivated a local following among Web surfers and turned the 300-employee company into one of the Internet's emerging power brokers. Google's site, and the 130 other businesses that license its technology, handles about 150 million search requests each day.
Except for a few twists, Google's auction-style system mirrors a model used by a prosperous rival, Overture Services Inc.
Pasadena-based Overture has emerged as one of the Internet's biggest financial successes. During the final half of 2001, the company earned $29.7 million on revenue of $173.7 million and this year management projects a $58 million profit on revenue of $442 million.
Privately held Google says it was profitable last year, but won't disclose the results. The company's revenue last year was about $60 million, estimated industry analyst Lanny Baker of Salomon Smith Barney.
The pay-for-placement system has alienated some people.
A consumer watchdog group last summer filed a Federal Trade Commission complaint alleging the results generated by several pay-for-placement search engines represented a deceptive advertising practice. The FTC hasn't publicly responded to the complaint.
Last month, Texas-based Mark Nutritional Inc. sued Overture and three other search engine companies. It alleged their advertising-driven sorting systems violated Mark Nutritional's trademark on a weight-loss program called Body Solutions by allowing other businesses to buy listings under the phrase.
Google plans to turn away companies trying to buy a listing under categories unrelated to their main business. For instance, Google already has refused advertising from credit card companies that tried to buy listings under the "Palm Pilot" category, said Omid Kordestani, the company's senior vice president of worldwide sales and business development.
Google also intends to maintain strong firewalls between the business and search sides of its operations.
"We take our editorial integrity very seriously, just like a newspaper does," Kordestani said.
Google will display up to eight advertisers on the far right-hand side of its Web page under a shaded section labeled "sponsored links."
The company has been listing results from advertisers under a similar format since 2000, but it previously sold space under a fixed pricing system, which prevented sites from boosting their rankings with more money.
