Overture links with CNN
AOL Time Warner's CNN news division says it will use the company's commercial search results throughout its Web sites.
The deal will fold Overture's pay-for-placement search results into CNN.com, CNNSI.com and CNNMoney.com. Visitors to these sites will see Overture results listed in search boxes posted on home pages, on section fronts and in news stories. Each of the boxes will contain Overture's top five commercial results marked as "sponsored results."
The deal follows months of tests at CNN.com of text-based advertising, which at one point had an appearance more akin to editorial links. In October, CNN.com displayed a series of stripped-down ads without properly labeling them as sponsored, raising some concern among journalism ethics experts. The company quickly fixed that, but at the time the advertising text links appeared at the top of news pages, adjacent to news headlines, without clear demarcation.
For Overture, which licenses search results that are paid for by advertisers, the CNN deal comes amid a push into international markets. The Pasadena, Calif.-based company Wednesday launched operations in Japan, where it already has agreements with Yahoo Japan and Microsoft's MSN. The company also has offices in Germany, the United Kingdom and France.
This is not the first time that Overture has worked with an AOL Time Warner company. In May, it lost one of its biggest customers when America Online decided instead to use paid search results from archrival Google. The loss of the AOL deal sent Overture's stock plummeting 36 percent the next day.
Overture counts Yahoo and MSN as its biggest customers, and its partnerships have been a financial booster for the Web giants. Wall Street analysts estimated that Overture contributed $30 million in cash to Yahoo last quarter, helping the Web portal achieve its second consecutive quarter of profitability. MSN has said that its cash windfall from Overture matches up with Yahoo's.
Overture auctions off search-result placement to advertisers. When Web surfers visit sites that host Overture results and click on the links, advertisers pay the company a price per click, and the company in turn shares that revenue with its distribution partners. The more traffic Web sites drive to Overture, the more Overture pays them.
However, Overture's business is highly dependent on its relationships with MSN and Yahoo, which contribute about 57 percent of its revenue. Furthermore, Google has made inroads into that area. In addition to AOL's switch to Google, Yahoo Japan last month struck deals with both Google and Overture to power preferred-search results despite Yahoo's exclusive arrangement with Overture for its main home page.
News.com's Stefanie Olsen contributed to this report.