Google Inks Amazon to Comprehensive Search Deal

Google sewed up an agreement to provide paid links and Web search on
Amazon.com’s popular e-commerce site, claiming
yet another big traffic source in the hotly competitive paid search space.

The agreement, financial terms of which were not disclosed Tuesday, calls
for
Amazon.com pages to carry Google’s paid search listings and its Web search
functionality. On product pages, related results will appear in a section headlined “Customers interested in [this product] may also be interested in” and labelled as “sponsored links.” They’ll also appear when Amazon.com users search the Web on the Amazon site. These features will be implemented over the next several
months, although the companies said sponsored links can already be found on
some of Amazon.com’s pages. It’s not clear exactly what length of time the
agreement covers. Company spokespeople simply described it as a multi-year deal,
but wouldn’t elaborate.

According to Nielsen//NetRatings, Amazon.com was the eighth
most trafficked Web property in February, attracting 23 million unique
visitors.

The Google-Amazon.com deal takes paid search even further off the search
page than it’s previously ventured. Recent moves by Google have expanded
paid search onto content sites, but an e-commerce site is a new and
surprising locale for sponsored links, because of the inevitable danger of
driving traffic to competitors. Currently, Google results appear on comparison shopping sites like BizRate.com, DealTime, and Ask Jeeves’ shopping section, but none of those sites sell products themselves. In the Amazon.com deal, competitive links will appear in the Web search results users retrieve via the Amazon.com site, but they may not appear on the product pages, a company spokesperson said. Google officials have said click-throughs and conversions generated via its e-commerce partners are comparable to those it generates on its own site.

This willingness to carry links to competitor’s sites highlights Amazon.com’s ambitions to be more of a portal than simply an e-commerce site. The deal will bring Amazon.com more revenues from facilitating commerce, rather than from selling goods itself. Interestingly, Google won’t be providing site search for Amazon.com. The e-commerce site will continue to use its proprietary technology to drive searches on its own site.

“The whole idea behind the deal is that we always think of the customer and then we work backwards,” said Drew Herdener, an Amazon.com spokesperson. “It all goes back to helping Amazon customers find the best and most relevant information on the Web, whether it’s on our site or not.”

The alliance is another blow for Overture , once
considered the undisputed leader in the space, which has suffered mightily
in the public markets as confidence about its prospects has waned. As of
press time, the company’s stock had been down as much as 11 percent on the
day before beginning to rebound, as investors weighed the
possibility that MSN and Yahoo! could be looking to develop their own
paid search programs — elbowing Overture out. Yahoo! and MSN account for a large
proportion of Overture’s traffic.

Signing Amazon is the latest of Google’s victories in the paid search arena,
to which it is a relative newcomer compared to Overture and Sprinks, which
is part of Primedia’s About network.

Its partners include America Online, Sportsline.com and some Disney sites,
and it has recently been pushing context-targeted products, which it’s
distributing on content sites and through ad
networks.

Google hasn’t been as successful with its paid search products in the international arena, where Overture
has been focusing its energies in an effort to reduce dependence on MSN and
Yahoo!. Overture this week signed a deal with MSN Korea, which, combined
with other deals, will give it 92 percent of the market, the company
estimates. The United Kingdom and France are also firmly in Overture’s grip,
as it has deals with the top ISPs in both of those countries. In Japan,
things are more evenly balanced, with Yahoo! Japan splitting its paid
listings business between Google and Overture.

Google has been especially successful in cases where partners, like
Amazon.com, want both paid search listings and algorithmic search — for
which Google is well known and respected. Overture, however, would like to
play in that arena, as well, an ambition which fueled its agreements to buy
AltaVista and the Web search unit of Oslo-based FAST Search & Transfer earlier this year.