LookSmart Inks Yahoo! Australia

The pay-for-placement search engine wars continue, as LookSmart inks a new client in the Australian and New Zealand unit of Web portal Yahoo .

New York-based LookSmart, which competes with market leader Overture and upstart Google for syndication deals with high-traffic portals, will deliver its paid search listings to Yahoo Australia & NZ, in return for a cut of the revenue.

Financial terms were not disclosed of the deal, which is technically between Yahoo Australia & NZ and LookSmart’s Australian subsidiary. The listings will be syndicated through February 2003.

The most interesting aspect of the development is that Yahoo’s U.S. Web portal employs Pasadena, Calif.-based Overture for its paid listings, through a deal that was only recently extended through the middle of this year.

Like Overture and Google, LookSmart sells cost-per-click (CPC) search engine listings, although it also offers paid positioning for the top-three results per keyword, after which it ranks results by relevancy. Overture, meanwhile, uses an auction model to sell CPC listings, which it ranks in search returns according to the amount advertising are willing to pay.

Mountain View, Calif.-based Google’s AdWords product — which it lists alongside its editorially-selected search results — are ranked both by the amount advertisers pay, and relevancy. Google also offers impression-based pricing as well.

In recent months, competition between the three has heated up, starting with Google’s entry into the field by syndicating its AdWords to portals — including the landing page of ISP EarthLink , a former Overture client.

Last month, in a bid to improve the relevancy of its own search engine results, LookSmart announced its intention to acquire search engine startup WiseNut, which ranks search results similarly to Google.

Aside from growing pressure from LookSmart and Google, Overture also is facing the potential expiration of two major deals. Not only must it contend with Sunnyvale, Calif.-based Yahoo — which has said that it is considering launching a paid listings product of its own — but also the pending conclusion of Overture’s work with AOL Time Warner , which was extended through the end of this month so that contract negotiations could continue. (Perhaps ominously, Google also recently began syndicating AdWords to AOL’s CompuServe site, which hosts the results in addition to listings from Overture.)

On the other hand, Overture has been stepping up its international efforts, recently opening a sales office in Germany to better service European clients, in addition to rolling out a German-language search engine for new clients like Deutsche Telekom’s T-Online. The company also recently solidified its syndication deal with Microsoft’s MSN portal, which had long been in a testing phase, the company said.

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