September 17, 2003

Overture Services announced on Wednesday its launch in Spain, marking the third international market the search company has entered this year.

Overture, which has agreed to be acquired by Yahoo!, said its distribution network in Spain reaches 71 percent of that country's 14 million Internet users. It includes many of Spain's top portals and Internet service providers, including MSN, Tiscali, Lycos, Excite, Wanadoo and Ya.

Spain adds to Overture's growing presence in Europe. At the start of the year, Overture operated in the United Kingdom, France and Germany. Since then, it has added Italy, the Netherlands, and now Spain. The company plans to launch operations in Austria, Switzerland, and Scandinavia by the end of the year.

In addition to its European markets, Overture offers paid search in Japan and South Korea. It plans to add Australia in the coming months. Overture is expected to get a further boost at the end of the year, when Espotting's deal with Yahoo! Europe expires. Yahoo!'s pending acquisition of Overture makes its implementation on the portal's international sites a virtual certainty.

Overture forecasts international operations will bring in $125 million in revenue this year and $300 million next year. Overture anticipates its international operations will break even this year.

Overture faces competition in Europe from both archrival Google and local player Espotting, which was acquired by FindWhat.com in June. Google mostly relies on its own local sites for distributing its paid listings in Europe. It signed away Ask Jeeves UK from Espotting in May, and also boasts a number of smaller deals such as those with ISPs BT OpenWorld and NTL in the United Kingdom.

Overture CEO Ted Meisel tabbed international expansion as a top company priority this year, as the company tried to diversify its business from dependence on its top two partners, Yahoo! and MSN. The blockbuster Yahoo!-Overture deal called into question whether MSN would continue to use Overture for its paid search services.

At the time of the deal and since, Overture executives have stressed their commitment to continuing to build their distribution networks, both in the United States and abroad. The company showed its commitment to maintaining its international distribution network earlier this month, when it successfully sued German ISP and portal T-Online to reinstate its search listings after T-Online said it would switch to Google on account of the Yahoo! deal. T-Online operates Ya in Spain.

While Yahoo! CEO Terry Semel said Overture's distribution network was not needed to justify the acquisition, its presence abroad is greatly helped by it, particularly Overture's relationship with MSN. Overture provides paid search to MSN in eight international markets -- every country Overture currently has operations.

MSN has stayed mum on the future of its Overture relationship. Their contract for paid listings on MSN sites expires at the end 2004; an agreement for paid listings on Internet Explorer searches ends in December.

Source: Silicon Valley Internet

        

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