Excite gets high-profile deal with Netcenter
The announcement comes less than a week after Netscape (NSCP) said it was extending contracts with Excite (XCIT) and three other Web directory sites -- Yahoo! (YHOO), Infoseek (SEEK) and Lycos (LCOS) -- as negotiations for a partner for a Netscape-branded search tool continued. Some analysts had expected Infoseek to get the nod as Netscape's search partner.
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 | Analysis: Infoseek not "excited" by Netscape deal |
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The two-year deal calls for Excite to help Netscape build its own search tool, and for Excite to build and sell advertising on certain Netcenter pages.
| Both companies could see huge Web traffic gains as a result of the partnership. |
It also calls for the companies to collaborate on building content for consumer-oriented channels set to debut on the overhauled Netcenter site in June, including classifieds, games, lifestyles, arts and leisure, real estate, shopping, education and autos, officials of the companies said in a news conference late Monday.
Content is king
"Working with Excite provides us with a set of leading content channels almost instantaneously," said Mike Homer, general manager of the Netcenter unit at Netscape.
Excite paid Netscape $70 million up front under the terms of the deal, officials of the companies said. The amount represents between 70 percent and 75 percent of the revenues Netscape expects to earn as a result of the deal over the next two years, said Excite CEO George Bell.
Officials said both companies could see huge Web traffic gains as a result of the partnership: Netcenter now has some 4.3 million registered users, and it earned $108 million in revenues in 1997. Of that amount, $95 million came from advertising and sponsorship deals, Netscape officials said.
Excite will be responsible for advertising sales for the co-branded channel pages on Netcenter, and for both Netscape and Excite-branded search pages, and advertising revenues from the co-branded channel pages and the results pages for the Netscape-brand search tool will be shared, officials of the companies said.
Sharing time
The Netscape-branded search service, to be called Netscape Search Powered by Excite, will share space on Netcenter with Excite's own search engine along with those of Yahoo! and Lycos, Homer said. (Yahoo!, in fact, still provides its "Netscape Guide by Yahoo!" tool on the Netscape home page, and that deal was not renegotiated as a result of Netscape's new partnership with Excite, he said.)
In the first year of the partnership, the Netscape Search Powered by Excite tool and the Excite search engine will each receive 25 percent of the traffic rotation, with the rest allocated to the other partners, Homer said. In the deal's second year, the Netscape-brand engine will get 50 percent of the search traffic, the Excite engine will get 25 percent, and the others will share the remaining 25 percent, he said.
The deal also expands content within Excite's Classifieds2000 unit across Netscape's Web network, making it the preferred classified ad provider for all Netscape sites.
The partnership does not represent an effort to combine the existing Excite and Netscape Web sites, however, Homer and Bell said.
Netscape's brand remains supreme
"The only brand that anybody sees on the Netscape home page will be Netscape," Homer said.
He added that Netcenter will retain unique offerings, including a database of profile information on users and dynamic software updates, that won't appear in the more consumer-oriented channels produced by Excite.
Asked about persistent rumors over the last week that Netscape was actually on the verge of picking Infoseek as its major search partner for Netcenter, a Netscape official said the company had been in negotiations with all four major Web directory companies -- Excite, Yahoo!, Lycos and Infoseek.
"I think the Infoseek rumor got started because we were in discussions with all four parties," said Jen Bailey, VP of marketing for Netcenter. The company, which still has existing deals with Yahoo!, Lycos and Infoseek to give each one a portion of the search traffic from its Web network, has no plans to burn any bridges, Bailey added.
"We have no idea what the (search) market is going to look like in two years' time," when the current Excite deal runs out, she said.