By Lisa Gill E-Commerce Times Part of the ECT News Network
01/06/03 12:04 PM PT
Search engines in general have found more success in generating advertising dollars through sponsored searches, according to Yankee Group analyst Rob Lancaster.
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In a move to simplify its user interface, search engine Ask Jeeves has announced
it will discontinue use of banner ads on all of its Web sites, instead focusing on
sponsored searches, paid for by advertisers, to generate revenue.
This move follows Ask Jeeves' recent elimination of interstitials, also known as
pop-up ads, from its Web site.
"We're focused on creating a more satisfying search experience for
both our users and our advertisers," said Steve Berkowitz, president
of Ask Jeeves Web Properties.
From now on, the search engine will rely on two advertising programs to
generate revenue: The first, Branded Response, is a pay-for-placement service
that uses graphics and images; the second, Premier Listings, places an
advertiser-sponsored text message at the top of search results.
Long-Planned Move
Ask Jeeves has been testing a banner-free site since last summer,
according to company spokesperson Carrie Bishop. Tests showed that
without banner ads, greater screen real estate was available
for sponsored searches.
Also last summer, in a precursor of the banner ban, Ask Jeeves replaced its
run-of-site banner ads with search-specific banners, Bishop told the E-Commerce Times.
Because banner ads make up less than 5 percent of the company's
revenue, according to Bishop, Ask Jeeves saw the opportunity to gain
even more revenue through sponsored search results. "We're hoping by
increasing user satisfaction, people will increase their use of the site
and thereby increase revenues."
Sponsored Searches Profitable
According to Ask Jeeves, Branded Response generates as much as
a 25 percent click-through rate. Such sponsored searches have proved
profitable for the Emeryville, California-based company, which has built
its fortune on "natural language" search techniques.
For example, the company anticipates that its Web properties, including its
various sponsored-search programs, will account for 87 percent of revenues
in its fiscal fourth quarter.
The company also reported that its paid placement business increased
40 percent between the first and second quarters of 2002.
Ask Jeeves' sponsorship revenues were also bolstered by a three-year,
US$100 million deal with Google (Nasdaq: GOOG) , announced last summer. Under terms
of that agreement, both companies share revenue from Google advertisers
on the Ask Jeeves sites. Google sponsored links replaced the third-party paid
listings previously included on Ask Jeeves.
Advertising Conflicts
Indeed, search engines in general have found more success in
generating advertising dollars through sponsored searches, according
to Yankee Group analyst Rob Lancaster. "By taking them away, you
increase usability, and you increase user perception it's an
effective site, and they're not getting bombarded with ads,"
Lancaster told the E-Commerce Times.
In Ask Jeeves' case, dropping banner ads also may prevent conflicts
between the different types of advertising services.
"It's more of a profit center for them to focus on providing
sponsored links, and do away with banner ads, particularly when
they're offering search as a service," Lancaster said.
programs to
generate revenue: The first, Branded Response, is a pay-for-placement service
that uses graphics and images; the second, Premier Listings, places an
advertiser-sponsored text message at the top of search results.
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