Yahoo! Promises More Search Moves

At its annual analyst day on Wednesday, Yahoo! executives reiterated the company’s commitment to search, promising to embed it throughout the network and in its international sites.

After taking in $140 million from paid search in 2002, Yahoo! executives sketched an ambitious plan to make search a major focus of the portal’s business in 2003 and beyond.

Speaking at the company’s annual briefing day for analysts on Wednesday, Yahoo! executives said its $235 million acquisition of search technology provider Inktomi in December was the first in a series of steps designed to build on the success the company has enjoyed with its paid listings provider Overture.

“We needed to become an agent in certain ways — at a minimum we needed to own the technology,” Yahoo! CEO Terry Semel said in the day’s opening remarks.

Jeff Weiner, the company’s senior vice president of search and marketplace, said the company had made great strides in search since overhauling its search function in October 2002 by changing the company’s internal search organization and improving its search-testing techniques. Now, Yahoo!’s search ranks regularly as the first or second most-used search engine.

Still, the search market is still growing. Weiner pointed out that just 70 percent of Internet users engage in search and the average cost per lead in search, 35 cents, lags far behind the $1 generated by yellow pages.

“We want to bring breadth and depth of Yahoo content into search,” he said. “We’re capable of doing some amazing things.”

Yahoo! plans to make search an integral part of all sections of the site to better tap into the revenue opportunities from its 101 million registered users. The company already rolled out a product-comparison search capability in September 2002.Yahoo! also has integrated its HotJobs unit into its search results, so a search for “accounting jobs” will yield HotJobs listings. Also, the company plans to put its search box on each page of the site.

Weiner said the company would complement this by integrating search with other much-used Yahoo! properties, such as Yahoo! Instant Messenger and the Yahoo! Companion toolbar search application.

The company also plans to offer paid inclusion, which allows businesses to earmark Web pages for inclusion in the database of Web pages crawled by a search engine.

Weiner said Yahoo! would probably expand its paid-listings business. Recently, it began testing adding extra paid listings on its search results page. Another way to do this would be to include paid listings on Yahoo! vertical areas, even if they haven’t been searched. For example, Weiner said Yahoo! could easily serve relevant paid listings to a user going to the portal’s real estate section.

Yahoo! expects to move the innovations to its international sites as well, he said.

When asked if Yahoo! could continue to rely on a third-party provider like Overture for a strategic part of its business, Weiner said Yahoo! always looked at whether it was best to build a technology, buy it, or outsource it. For now, the company has concluded that contracting with Overture makes the most sense for the business.

“We enjoy a very strong relationship with Overture,” he said. “They’ve done a great job with driving up our RPS (revenue per search) number.”

However, Weiner did not rule out Yahoo! striking out on its own, saying market conditions would dictate the company’s moves.

“We’re going to do what’s best in terms of driving value, not only in terms of the user but for Yahoo!” he said.

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