July 30, 2001, 12:00 AM

Paid search engines emerging as successful strategy in soft ad market.

Revenues at paid search engine GoTo.com rose 30% versus declines at other ad-supported sites.

Paid search engine placement is faring well as an online advertising strategy in what’s generally a soft ad marketplace, says a new report by Jupiter Media Metrix. Paid search engine GoTo.com, for example, experienced nearly 30% revenue growth in the first quarter of this year over the previous year’s fourth quarter. Paid search engine Looksmart.com experienced only a 7% decline in ad revenues during the same period, in contrast to sharp declines in revenue at other ad-supported sites.

Paid search engine placement is succeeding because consumers that use them are finding the listings they want faster, says Jupiter. Media Metrix data show visitors to GoTo.com, for example, spent an average 56 minutes on the site, while Yahoo!’s proprietary search engine keeps shoppers onsite for an average 106 minutes. It’s an indication that consumers are more satisfied with their findings on paid search engines, Jupiter says.

“Paid search engines` ability to succeed has been driven largely by their efficiency for both consumers and markers,” says Jupiter analyst Marissa Gluck.

Other recent Jupiter findings suggest that while retailers are spending millions to be included in portals’ shopping channels and on banners related to keywords, paid search engine placement is more important to sales than they realize. For example, 28% of consumers go directly to a search engine and enter the type of product they’re looking for when shopping online, but only 5% start by going to the shopping channel of a search engine. The findings, says Gluck, “reinforce the need for retailers to diversify their ad placements to include paid search engines.”


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