GoTo Snaps Up Directory Tech Firm to Boost Search Results Ads

GoTo said Thursday that is has acquired Hawaii-based startup SearchUP, which provides search engine pay-for-placement technology.

The acquisition, GoTo said, expands its own back-end technology and support. The company charges advertisers on a per-click basis for keyword-based placement on its search engine results. The per-click price is set through auction — advertisers bid on return rankings through GoTo’s auction-transaction engine.

That engine will be enhanced through the acquisition of SearchUP, and its URL Position Manager system, which is similar in function to GoTo’s. However, URL Position Manager’s proprietary technology, which works on a proportional bidding system, enables small companies the opportunity to compete with larger companies able to bid more.

“SearchUP’s technology and systems are a great fit with GoTo,” said GoTo senior vice president Jay Gallinatti. “Our advertisers can only benefit from our increased focus on serving them as we continue to expand our Internet reach.”

The news comes as GoTo launches a major rebranding effort, which it also announced this week. The company began as a portal and competed with the likes of Yahoo!, Excite and Lycos. But recognizing that its affiliate and technology programs — through which GoTo provides pay-for-placement Web site search and auction technology — generates more 90 percent more traffic than its consumer portal, GoTo is becoming a tech play.

The Pasadena, Calif.-based company also announced that it has retained branding consultancy NameLab to devise a new corporate name, pending shareholder approval.

Through terms of the acquisition, GoTo will transfer 261,255 shares of GoTo common stock to SearchUP.

Shares of GOTO closed down 4 percent Thursday, finishing the day at $12.38.