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Adsense would seem to offer a demonstration that there is money to be made for both webmasters and advertising syndicators on sites beyond the top few high volume portals. From an advertiser's standpoint, Adsense offers the opportunity for exposure on new sites to new customers.
While Overture currently lacks the spidering and page analysis that Google has, I'm sure there are some business models that would work. Even webmaster-selected search terms might work. E.g., if I have a page about widgets, I could put code on the page with an Overture search for "widgets". I do something like this for Amazon now, and I have the ability to precisely target the search for optimal results.
Of course, there would be some kinks to be worked out. I'm sure somebody would put links to Mesothelioma searches on every page, hoping that the occasional befuddled visitor might click one by mistake or out of curiousity; this would reduce the quality of the clicks in a major way. Presumably, there could be some safeguards put in place that would deal with this kind of issue. Indeed, even Google will no doubt be facing some of these issues very soon.
Nevertheless, it seems like Overture will have to respond in some manner. Thoughts?
If seems like Overture will have to respond, though. If not, Google will be everywhere... and Overture won't be anywhere except on a few major search sites.
I suppose OT could view it in terms of Pareto's law (the oft-cited 80/20 rule) - if they focus on the biggest sites, they'll have access to most of the traffic. On the web, I suspect 80% of the traffic is generated by well under 20% of the sites.
However Overture, if a bit less creative, does know its business model and is smart. This can be seen from their purchase of altavista and alltheweb (fast websearch). They are building an all-in-one solution for isps/large sites. I strongly suspect that they may end up with a product that benefits partners more than googles offering. For one thing they accept paid for inclusion (may even be a cost per click paid-inclusion system) as well as pay per click. They may get to the stage where there results essentially provide more money to isps etc than google would. Then all they have to do is tell the isp to trial both of them. Also remember that overture will happily display ALL ppc results on partner sites regardless of the "search quality" if partners want that. I suspect google will be forced to display adwords only results as main "search results" with partners in the future.
I still think googles results would be better. Lets face it though, search engines (like altavista) are bascially copying googles link popularity system - hence results are no longer THAT different. Until recently Googles other advantage was their adwords ranking system based on bid price AND click through rates - making results much better than overture/espotting (and more money for their partner sites). I could be wrong, but I think Overtures bidmatch evens this up (havn't used overture).
I suppose OT could view it in terms of Pareto's law (the oft-cited 80/20 rule) - if they focus on the biggest sites, they'll have access to most of the traffic. On the web, I suspect 80% of the traffic is generated by well under 20% of the sites.
I very much doubt that 80% of the Web's traffic is generated by well under 20% of the sites, but even if that were true, so what? The real potential for targeted text ads like AdSense is on niche sites, not on big general-interest news sites and portals.
Let's look at a hypothetical example: luxury cruises with a per diem of $700+. If you were a travel agency selling those cruises, would you rather have clickthroughs from:
a) CNN.com and MSNBC.com, or...
b) The Robb Report (a magazine and Web site catering to the rich) and a site for cruise devotees?
On the targeted sites, prospects will be worth more--and will convert better--than prospects from the travel pages of CNN or MSNBC (where the average reader has no idea what a luxury cruise costs).
There's also a whole world of niche audiences that the big news sites and portals can't reach--everything from classic-car restorers to amateur radio operators to gourmet cooks. Such audiences are worth a lot of money to the right marketers, and to the targeted text-ad network that can deliver those readers. That's why Google's AdSense is likely to be the most important advance in PPC advertising since PPC was invented--and it's why Overture's new "Content Match" program is, at best, a placeholder for a network that can reach highly profitable niche audiences the way AdSense does.
IMHO, if Overture wants to compete with Google, it needs to go the AdSense concept one better by offering such features as:
1) Human review of publishers (to assure that advertisers' text ads run only on sites of acceptable quality).
2) Targeting by category and keywords, not just by keywords (so that an article on "Using ATM machines in Europe" won't have an ad for ATM supplies and equipment).
3) More advertiser choices (e.g., search only, content sites only, and subsets of content sites).
Note: Google's AdSense program is in its infancy, and it may well introduce such features itself before Overture has a chance to respond. It'll be interesting to see how things pan out, but at this point, I'd bet on Google to stay ahead of Overture as a distributor of highly-targeted text ads on niche sites.
