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AltaVista to auction premier ad placement

Hoping to expand its revenue stream, the search engine will begin auctioning off placement on its search result real estate to advertisers.

Hoping to expand its revenue stream, AltaVista will begin auctioning off placement on its search engine's real estate to advertisers.

The Compaq Computer-owned Web search engine will give the highest advertising bidder premier placement on search result pages for specified inquiries. The auctioned links will prominently reside above all other search results for the specific query.

Starting April 19, the program will launch with one paid placement per page but eventually will expand to include two placements. AltaVista said it already has inked its agreements with bidders but would not divulge the companies' names.

But some critics say the new service will make it harder to distinguish between online content and advertising. AltaVista was created in 1995 by three employees of Digital Equipment Corporation, which was acquired by Compaq in June 1998. AltaVista prided itself on creating technology that could search the entire Web "objectively" based on keywords.

Almost as soon as the ad placement plan was announced, AltaVista had to defend itself over the ethical ramifications of selling Internet content.

"We'll either box it in or put it in some kind of section that's separate," said Celia Francis, director of marketing for AltaVista.

AltaVista traditionally has incorporated its own search technology to pull up search results. But allowing advertisers to bid for placement on its results page will give AltaVista a revenue stream that extends beyond advertiser placement throughout the site.

AltaVista contends its search engine will not radically change as a result of the policy shift. Rather, the new features will make the site more "relevant," according to Rod Schrock, AltaVista chief executive.

"The search site is all about delivering the most relevant results in the most relevant fashion," said Schrock. "This is just a natural evolutionary step for us."

While critics contend that users may not think they are getting an "objective" search, having advertisers bid for placement is not new. Search engine GoTo follows a similar system and includes the price for advertisers next to each search result.

AltaVista's plans were first reported by Wired News.

Compaq is planning to take AltaVista public in hopes of cashing in on the Internet initial public offering frenzy. The Houston-based computer giant also has taken steps to beef up AltaVista's offerings. In recent months it has acquired e-commerce site Shopping.com and local guide network Zip2.

Schrock would not comment specifically on when AltaVista will go public but said the IPO date is "on track for before Christmas."