But the Sunnyvale-based portal company has profited handsomely from their foray into the Internet search market.
Four years ago, Yahoo was stuck in the same dot-com slump that had crushed Silicon Valley and removed billions of dollars in market capitalization from tech firms. Where could they go next as a business to grow and profit?
According to a Seattle Times report, the answer came from a search engine advertising firm called Overture. That company believed in the forthcoming profit power of advertising, and wanted to form a partnership with Yahoo.
Yahoo agreed, after executives were able to realize search technology as a business priority. That shift accounts for what one analyst estimates at $1.2 billion USD in ad revenue for the company last year.
And Yahoo has improved its search engine and gained the trust of people doing searches. About 31% of Internet users in February who performed search queries did so on Yahoo; 36% went to Google, according to comScore.
“I think they’re extremely strongly positioned,” said Chris Sherman, associate editor of Search Engine Watch. “They’re definitely on par with Google when it comes to search products. They’re creating buzz again.”
Yahoo entered the search engine business when it purchased Inktomi. Yet another victim of the dot-com collapse, Inktomi was spiraling to a crash when Yahoo bought it in late 2002. In the middle of 2003, Yahoo went from partnering with Overture to purchasing it.
Now Yahoo had a search engine of its own, and the technology to place ads with search results. Most importantly, Yahoo wanted to end its partnership with Google, which was serving search results for Yahoo’s 165 million registered users.
Finally in February 2004, Yahoo made the change on its web site, serving up search results and ads and ending the Google partnership.
David Utter is a staff writer for Murdok covering technology and business. Email him here.
