Learning From the Winners

A major dot-com player finally showed some promising financial indications last week. GoTo.com, a leading performance-based search provider, announced that it expects to exceed its original sales expectations of $45 million for the first quarter (Reuters).

Although the new sales expectations have not been disclosed, the company stated that its member base has now surpassed 40,000 active, paying advertisers. This is timely news amidst all the dot-com war stories, so it’s important to recognize the companies that appear to be dealing with a struggling market and to learn from them.

This is not to say that GoTo has been immune to the struggling market (its stock trend has looked pretty typical over the past year), but it has been different than most ad-supported Web properties in that advertisers seem confident in its services (along with the many other paid search providers, although GoTo is the dominant player in this space). The reason, simply put, is that advertisers are getting a return on ad dollars spent.

Search Traffic Sells

There is no doubt that for most online advertisers, the best traffic that can be driven to a Web site is natural search traffic. Of course, bringing a relevant user to your Web site when he or she is seeking your product, service, or content is the perfect time to show your stuff, and, hence, far more likely to result in a conversion (whatever your conversion goal may be) than a visitor who clicks through on a distracting ad.

In essence, it is the difference between having a buyer looking for you versus your having to be proactive about your sales. For this reason, search engine optimization services make sense to any online advertiser, particularly right before beginning a creative campaign.

Getting back to the ROI perspective, it’s not just theoretical that search traffic sells. This has been measured, and most agencies have their own case-study data to prove it. Generally speaking, search placements are among the best-performing media placements for advertisers, whether they are unsponsored links, keyword-relevant banner ads, or paid search results such as those through GoTo.

Although many types of advertisers benefit from an ad strategy built around the search, e-tailers seem to do particularly well here. As always, the focus needs to be on dollars in/dollars out, particularly those advertisers in start-up mode.

Expanding Affiliates Works

GoTo.com has been effective in dominating the paid search results space by promoting its services to potential advertisers and increasing its affiliations with other search engines that host their search links. Advertisers can spend increasingly higher portions of ad budgets through search engines, attracting more search-generated traffic to their sites. Of course, sponsored search is by no means the entire online ad solution, as it still lacks the entire creative component.

GoTo recently expanded its affiliate base even more with its new arrangement to become the search provider for long-time archrival Go.com, owned by the Disney Internet Group (DIG). Although Disney ceased all Go.com operations in early February, it recently decided to continue the portal’s operations by implementing content through partnerships, along with an exclusive search partnership with GoTo, the very same company that won a $21 million copyright infringement lawsuit against Disney last May. It appears as if the two parties have put any ill feelings aside in lieu of an easy cash generator for both sides.

It is clear that GoTo differs from other ad-supported Web properties in its strong ability to show advertisers a return on dollars spent and its strong business-development model, which makes its services attractive and profitable for affiliated search distribution partners. What makes GoTo unique is its dominance of this space along with its ability to create demand from both ends of the business model. Good news in the industry is hard to come by, and this is one case worth comparing against other ad-supported Web properties that have been less successful.