Overture Expanding Globally With MSN Korea

  |  April 1, 2003   |  Comments

Analysts cite need for international expansion as well as the challenge from Google in search-driven ad market for Overture's push.

Overture Services said Tuesday it would expand its deal with Microsoft to provide commercial search listings for MSN Korea.

The deal calls for Overture to provide paid listings through MSN Search Pane and MSN's site in Korea. The Search Pane deal last until December 2003; the MSN site deal expires in December 2004.

With MSN sewed up in Korea, Overture has a solid footprint for its official launch there in the next few months. Earlier this year, Overture signed a three-year deal with Daum Communications, which runs the top portal in Korea, to use its paid listings. These two deals, combined with a pact with smaller portal Dreamwiz, would give it a reach 92 percent in the Korean market, Overture said.

"Our partners there understand that Google is a competitor and out to get them," said Johannes Larcher, Overture International's general manager.

He said Overture stresses to partners that its site does not compete for search traffic, unlike Google's.

The Korea deal also builds on an existing global partnership Overture already has with MSN. Overture and MSN have paid-search deals in the United States, Canada, the United Kingdom, Germany, France and Japan -- all the markets in which Overture currently operates.

Korea will be Overture's fifth international market, with further expansion on tap this year in Italy and Spain, in addition to possibly other European countries.

"Overture is making a big push for international expansion now, so as to continue its growth for 2004," said Richard Fetyko, a research analyst at Kaufman Brothers.

Overture CEO Ted Meisel has said international expansion is one of the company's top priorities. Other than seeing attractive new markets, Overture hopes its moves abroad will lessen its dependence on its biggest partners, Yahoo and MSN. Together, the two account for two thirds of Overture's revenues. Thanks to favorable deals, the two companies take a substantial cut of the revenue generated from the paid listings.

While Yahoo and MSN are very strong abroad, Meisel said the company would end up further diversifying its revenue base with a more international growth. This year, Overture expects to generate $120 million from abroad, although it will lose money from ramp-up costs in the new markets.

"Going overseas is the right strategy, but we don't think they can ramp up the revenues overseas as fast as the company is projecting," Fetyko added. "We expect Google to shadow Overture everywhere around the world."

So far, however, Overture has held its own in most international markets. In the United Kingdom and France, it has signed up the top ISPs. In Japan, Yahoo Japan, which dominates the market, decided to split its paid-listings business between Google and Overture.

Brian Morrissey contributed to this article.

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