Excite does classifieds with latest purchase

Summary:The latest volley in the battle among the Web's directory-service giants was fired Monday when Excite Inc. announced its $48 million stock purchase of Classifieds2000, an online classified-advertising service.

The latest volley in the battle among the Web's directory-service giants was fired Monday when Excite Inc. announced its $48 million stock purchase of Classifieds2000, an online classified-advertising service.

It's not just about searching anymore -- the major Web portals, including Excite (XCIT), Yahoo! Inc. (YHOO), Lycos (LCOS), and Infoseek (SEEK), are angling for purchases that will allow them to offer the most useful consumer services, according to Joe Kraus, Excite's senior vice president. As a longtime business partner, Classifieds2000 was a natural acquisition target, he said.

'The whole portal issue is kind of a double-edged sword.'
-- Sani El-Fishawy, Classifieds2000 CEO

"We believe classifieds are going to be a major market opportunity on the Web," Kraus said in an interview.

The classified-ads model allows anyone to become a retailer and lets small businesses gain major reach, "reducing the cost of information distribution and aggregating lots of disparate types of products and businesses in one place," helping deliver on the consumer-ease-of-use promise of the Web, he added.

The addition of Classifieds2000's laundry list of advertising services will help Excite round out its consumer offerings, and will be a boon to the company in its bid to become the Web's premier portal, said Sani El-Fishawy, CEO of Classifieds2000, in an interview.

Although Classifieds2000 has existing partnerships with Excite rivals including Lycos, the acquisition will not keep the company from continuing those relationships, Kraus and El-Fishawy said.

"The whole portal issue is kind of a double-edged sword," El-Fishawy added. To stand out above its peers, Excite will need to offer "depth of content instead of just aggregating others' content," and bundling of Classifieds2000's offerings will help it do just that, he said.

El-Fishawy will remain as head of the Classifieds2000 unit at Excite, and no layoffs are expected as a result of the merger, officials of the companies said.

The deal also calls for Classifieds2000 to integrate its service throughout Excite's other Web sites, including www.webcrawler.com. The www.classifieds2000.com site will remain operating as a stand-alone site, officials of the companies said.

As its stock price has skyrocketed, Excite has made a series of acquisitions that have mirrored the overall consolidation in the Web directory services market in recent months. In October 1997, Excite paid $35 million for Netbot, an e-commerce firm, and it acquired MatchLogic, a Web advertising services firm, for $89 million in January.

And last week, Excite announced a three-year, multimillion-dollar marketing partnership with Software.net, while Lycos announced a similar $18.5 million deal with online music seller CDNow.

Topics: E-Commerce

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