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Web companies searching for dollars

Executives at Yahoo and Overture see rosy days ahead for search technology. At a conference in Boston, however, they're long on vision but short on details.

BOSTON--Executives of leading Web search companies see rosy days ahead for their technology.

The search box is

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becoming dominant in all areas of the Web for news, finance, shopping, personals and jobs; and Yahoo is committed to making the most of the opportunity, according to the company's vice president of search, Tim Cadogan.

"Search is working so well from a user point of view and from a business perspective," Cadogan said in a keynote address at the Search Engine Strategies conference here Wednesday. "So Web search is spreading."

Yahoo recently purchased technology from Inktomi to bolster its search capabilities, and the portal is expected to expand its relationship with commercial search kingpin Overture Services to showcase more of its sponsored results.

The momentum behind online search activities has a significant financial component. Overture's chief technology officer, Paul Ryan, in his own keynote address on Tuesday, estimated that in the next couple of years, sales from search engine marketing will hit about $6 billion--just shy of the total worth of the online advertising market in 2002.

Ryan outlined his vision for coming improvements to paid search listings, a market his company pioneered, and to the science of indexing billions of Web documents to produce relevant, noncommercial results--an area dominated by rival Google and new territory for Overture Services.

"There's a lot of work to be done in Web search," said Ryan. "All of the search engines have fundamental problems with relevance."

All eyes were on Overture for answers, given its recent acquisitions of Web search technology from CMGI-owned AltaVista and Norway-based Fast Search & Transfer, dramatically changing the balance of power in the search industry. Overture's services now match those of Google, which is the darling of Web search and has itself quickly achieved parity with Overture's commercial search offers.

But Ryan gave only a brief sketch of how to improve search engine technology with intelligence on the context of keyword queries and knowledge of a Web surfer's intent while searching. (In contrast, just six months ago, Google CTO Craig Silverstein compared the future of search to the sophisticated artificial intelligence system in the "Star Trek" television series.)

Yahoo's Cadogan also outlined areas that his company sees as key for innovation in Web search, including understanding the intent behind queries. In the future, he said, if a Yahoo visitor types the word "Windows" in a search field, Yahoo might deliver results that provide helpful choices among products to buy or research links. He also said that improvements will help match people looking for products and services with commercial interests.

In addition, Yahoo is experimenting with a new search interface that will feature simplicity and give Web surfers greater access to information within search results, Cadogan said.

"There has been a tension between the user experience and the economics of search," he said. "Our challenge is to strike the right balance."

Though the Overture and Yahoo executives offered few details, what was clear is that the Internet search industry is dominated by commercialized interests. Conference panels throughout the three days of the conference are focused on techniques that would allow marketers to pay for placement in search engines and search ad networks such as Overture and Google AdWords. In contrast, only two years ago, panels were largely focused on how Webmasters could submit their sites without fees to search engines.

Conference attendees in years past have typically consisted of ragtag Webmasters or mom-and-pop Web site operators. This year, panels were packed with well-suited attendees, investment bankers and Fortune 500 advertisers. According to program organizers, the conference signed up roughly 1,300 attendees, nearly double from a year ago.

Christina Crawford, Internet marketing manager for American Express Incentive Services, said her company allotted a "significantly larger" budget to search engine advertising in 2003 after being surprised about the effect of a campaign on Overture and Google over the holiday season.

She said that search engine marketing drove about 40 percent of the calls to buy American Express gift checks in one month, versus a wide-scale direct mail campaign that drove the rest. The cost of the Internet campaign was about $600, compared with tens of thousands spent on direct mail, Crawford said.

"I only advertised for one month," she said. "Now (American Express Incentives) is all about paid search."