UPDATE: The search leader's nascent contextual advertising offering gains distribution on over 4 million member-generated pages in eight European countries.
Google signed a deal with Lycos Europe to distribute its Content-Targeted AdWords listings on the portal's member-generated Web pages in eight European countries.
The contextual ads will appear on a total of four million pages of Lycos Tripod, a free service that lets Lycos members create their own Web pages. The contextual ads now appear on Tripod sites in the United Kingdom and Germany, and will roll out to France next month. Denmark, Italy, Spain and Sweden follow in August. The ads appear in skyscraper placements on Tripod pages, displaying four paid listings on the right side of the page. Advertisers select targeting parameters for their ads, including geo-targeting and language.
With its contextual advertising, Google uses its algorithmic search capability to scan the pages for their subject matter and serve relevant keyword-targeted paid listings. For example, on a Lycos UK Web site devoted to furniture restoration, Google returns links for four antiques and furniture businesses from its base of 100,000 advertisers. (AdWords advertisers can opt not to have their listings appear on content pages.) When visitors click on the text links, Google and Lycos split the revenue generated from the advertiser, which pays a certain amount for each click.
The agreement is restricted to Tripod. Google and Lycos Europe did not reveal the length of the deal.
Lycos Europe is the latest addition to Google's stable of distribution partners for its contextual advertising program and its first abroad. Content-Targeted AdWords listings also appear on sites in the Burst Media and FastClick ad networks, as well as on some Knight-Ridder Digital properties.
By rolling out its contextual advertising product in late February, Google gained a step on rival Overture Services, which is developing its own offering. Overture expects to start its contextual advertising program very shortly.
Google's deal with Lycos Europe snatches a potential partner from Overture, which provides paid listings on Lycos Europe search pages.
In addition, the two search giants have competition from Sprinks, a unit of Primedia's About. Earlier this week, Sprinks announced a deal with AOL to provide contextual links on Netscape, CompuServe and AOL Instant Messenger Web pages. The company's listings also appear on Forbes.com, MarketWatch and iVillage. Yahoo is testing Sprinks ads in its health section, and Sprinks General Manager Lance Podell said he expects to conclude a deal with the portal soon.
Google has made contextual advertising a key area of investment. In April, it scooped up Applied Semantics, in large part to add its content-targeting capabilities to its arsenal.
The move to contextual advertising is part of the industry's efforts to capitalize on the momentum created by paid search. U.S. Bancorp Piper Jaffray estimates the industry will generate $2.1 billion this year and $7 billion in 2007.
User-generated sites, which have had a tough time drawing much attention from advertisers, are an area of particular interest for Google. In its initial rollout, Google includes contextual ads on sites developed by Blogger.com, part of a Weblog company Google bought in February called Pyra Labs. In March, in fact, a Google executive claimed that the company's paid links could have made profits for the infamous dot-com flameout theglobe.com.
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