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The Kelsey Report® Advisory

Are SMEs Ready for Pay for Performance?
Charles Laughlin , 4/29/2002

Issue: Overture Model Raises Questions for IYP Industry

News: The beleaguered online advertising industry has a new darling these days. It's a company that bills itself as being cut from the same cloth as the century-old Yellow Pages Overture Services Inc.

Following the directory industry's longstanding pay-for-placement model, Overture (formerly has successfully combined paid advertising with one of the Internet's most popular and useful functions: search. In the process, Overture has accomplished something very few Internet companies have been able to achieve, profitability. In 2001, a year in which many dot-coms keeled over, Overture boasted a $20 million profit on revenue of $288 million.

Not surprisingly, the Web's most popular search engine, Google, is attempting to duplicate Overture's success through the sale of paid listings within its own search results. In response, Overture this month sued Google, alleging that the technology Google uses to sell its paid listings infringe on an Overture patent.

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