Overture agrees to buy AltaVista for $140 million
Paid search provider Overture Services Inc. has agreed to acquire search engine AltaVista Co., a web pioneer in algorithmic search, from CMGI Inc. for $140 million in cash and stock in a deal that’s expected to close in April, the companies announced this week.
The acquisition broadens Overture’s search offerings to portals, ISPs and other destination sites, and will provide additional marketing opportunities to Overture’s 80,000 advertisers, the company says. Overture says it will use AltaVista to test new search services and marketing products for advertisers and that it plans to enhance AltaVista’s existing paid inclusion products.
The addition of AltaVista to Overture’s lineup strategically complements Overture’s market-leading technology in commercial search and “will help support Overture’s entry into algorithmic search,” according to Overture.
It’s a significant move for Overture as competition intensifies with top search engine Google. Google already has broadened its algorithmic search results to add clearly-identified paid placements for advertisers in the form of sponsored links and Google AdWords.
Jupiter Research analyst Matthew Berk calls the purchase price low, given the price the last time AltaVista changed hands. That was in 1999, when CMGI acquired it for approximately $2.3 billion. At the time, AltaVista also offered other portal-type functionality along with search results, much of which has been eliminated over the past several months.
“AltaVista for many years was the engine of choice for enthusiasts, people who took the web seriously,” says Berk. The fall of AltaVista–-at least in terms of its valuation--coincides with the rise of Google as the search tool of choice not just for web enthusiasts but a broader audience, he adds.
The deal is part of a larger trend toward confluence of commercial and algorithmic search, Berk notes. “Consumers associate different search providers with different kinds of search depending on context, even though they may deliver the same results,” he says. “As long as consumers keep their affiliations to multiple search on the front end, there will be opportunity for multiple search providers in that space. But on the business side--luring in advertisers for paid search–-there will be a lot fiercer competition.”
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