Gets E-Commerce Tools

  |  September 3, 2003   |  Comments

UPDATE: The $8 million deal for Miva will bring the search player further offerings for small businesses.

Search provider announced on Wednesday plans to acquire Miva, a provider of online storefronts and other e-commerce functions, in a bid to buff up its offerings for small businesses.

FindWhat agreed to pay privately held Miva's shareholders $2.7 million in cash and $2.7 million in stock, also assuming about $2.5 million in notes and liabilities. Miva offers small businesses the opportunities to improve their e-commerce capabilities through its Miva Merchant storefront product.

The deal is subject to approval by both companies' boards of directors. Miva would operate as a division of FindWhat, maintaining its offices in San Diego and top management. The deal is expected to close by the end of the year.

The purchase represents a commitment by FindWhat to strengthening its position among the small businesses that were the early adopters of paid search. As a second-tier paid search provider behind Google and Overture Services, FindWhat built a thriving business in appealing to more cost-conscious advertisers by striking distribution deals with smaller search partners, including Dogpile and Excite.

However, the Fort Myers, Fla., company recently reported that its advertiser base declined last quarter for the first time in two years, ending the quarter with 900 fewer accounts. FindWhat CEO Craig Pisaris-Henderson said most of the lost accounts were small advertisers who spent very little, as FindWhat concentrated on increasing the amount its advertisers spent. He pointed out that the average advertiser's account rose to $715 in the quarter.

In April, FindWhat decided to up its minimum to bid to 5 cents in an attempt to up its average price per click. The company has also created an agency sales team to concentrate on getting larger accounts.

Pisaris-Henderson, speaking at a Kaufman Brothers investor conference on Wednesday, said the company would give small businesses the chance to go beyond just using search marketing to draw visitors to their sites.

"Is it all about the click? We don't think so," he said. "The next step is to not just get the traffic but get the traffic to convert."

Miva will bring to FindWhat 70,000 registered users of Miva Merchant. It has 1,100 distribution partners. The company will not, however, bring profits: Miva said it lost $400,000 in the first six months of the year on $1 million of revenue.

FindWhat greatly expanded its international reach in June, when it inked a $163 million deal to acquire European paid search company Espotting. The deal is expected to close in the fourth quarter.


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