RealTime IT News

Overture, AOL in European Deal

Paid search listings firm Overture is gaining an important distribution channel in Europe, thanks to a new agreement with AOL Europe.

Through the arrangement, Overture's London-based European unit will syndicate its listings across AOL Europe's systems and Web sites in Germany, France and the U.K.

The two companies said they plan to have Overture's listings appearing on AOL U.K. by next month and in Germany by April. Overture has yet to finalize plans for its own corporate launch in the French market, though syndication on AOL France should take place shortly thereafter, the firm said.

The firms said AOL Europe's users would be some of the chief beneficiaries of the arrangement.

"We believe our members and Web users across Germany, France and the U.K. will find Overture's expansive and relevant listings a real benefit to their online experience," said AOL Europe chief financial officer Philip Rowley. "This agreement underscores our commitment to providing European consumers with the best possible online experience in the market while providing great value to our partners."

The move gives Overture, headquartered in Pasadena, Calif., expanded access to European consumers, which also expands its advertisers' distribution at no special cost. AOL Europe has about 5.5 million subscribers to its regional services. Already in Europe, Overture provides paid search listings for German portal T-Online and the U.K.'s Virgin One, Excite U.K., AltaVista U.K., and beeb.com, among others.

"This agreement builds on our core strategy to deepen existing affiliate relationships and demonstrates the important growth potential we see in Europe," said Nick Hynes, who is managing director and president at Overture Europe.

Expansion of this sort has proven lucrative for Overture, since its successful revenue model is heavily dependent on scale. The firm, which receives a percentage of fees from each user click on a search listing, turned its first profit in third quarter after several years of expanding its network to new affiliates. As a result of that effort, the company's partners now include some of the largest names in U.S. online media (including America Online).

Meanwhile, AOL Europe's soon-to-be sole parent, New York-based AOL Time Warner is looking to set the European unit on solid financial ground, after suffering through a messy divorce from German media conglomerate Bertelsmann AG.

Several months ago, New York-based AOL Time Warner announced plans to use equity to finance the multi-billion-dollar buyout of Bertelsmann's stake in AOL Europe. It wasn't until earlier this month, however, that AOL agreed to revise the transaction's terms to pay cash only for the unit -- a move that's more palatable to investors than the earlier deal, since the U.S. firm's share price is hovering near its 52-week-low, and could fall further due to dilution effects after the sale. (Bertelsmann, for its part, also has said that it does not want ownership in AOL Time Warner.)

As a result, an agreement with Overture could help cushion AOL Time Warner's ongoing expenses for the Europe division, the financial burden of which had been shouldered chiefly by Bertelsmann.