Since vendors are allowed to bid competitively for placement in GoTo's results, the company says users are more likely to find prominent -- and therefore relevant -- sites in their searches.
But Monday, GoTo, of Pasadena, Calif., decided to supplement its own search results with those of Inktomi Corp., a technology company that makes search-engine guts for companies such as Wired Ventures and Microsoft (MSFT).
|Experts skeptical on Inktomi IPO.|
"Adding (Inktomi's) search capability to our market-driven advertising model ensures our users have access to the most comprehensive search results on the Internet," said GoTo.com CEO Jeffrey Brewer in a statement.
Regardless of how compelling GoTo.com's search results are, however, there's no doubt that competing against search sites Yahoo! (YHOO), Excite, Infoseek Corp. (SEEK) and Lycos Inc. (LCOS) -- which have become some of the best-capitalized Internet companies on the market -- will be an uphill battle.
"This bolsters GoTo.com's portal technology, but it doesn't do much to help them in the competitive world of page-view generation," said Vernon Keenan, an analyst with Zona Research Inc. "Unless they've got $50 (million) to $100 million to spend on a real-world ad campaign, they're going to need a clever partnering strategy to get from being a wannabe to being something important."
Search-engine sites, or Web "portals" as they are called in industry jargon, often buy promotional agreements with their competitors. For example, Netscape Communications Corp. (NSCP), whose Netcenter site competes with Excite, Lycos, AltaVista and Infoseek, has traffic-sharing agreements with all four companies.
"There's a certain kind of incongruity in the competition model ... but for GoTo that's a bullet they're going to have to bite," Keenan said.
San Mateo, Calif.-based Inktomi, which is expecting to make an initial public offering of common stock in the next few days, also provides search results to Yahoo! and CNet Inc.'s (CNWK) Snap! Online portal site.
"We're pleased to work with GoTo to insure that their users are delivered the most comprehensive search results on the Web," said Inktomi general manager Alex Edelstein in a statement. Because of the "quiet period" the Securities and Exchange Commission requires companies to observe before their IPOs, Inktomi representatives would not comment.
Experts say Inktomi, which has signed a spate of high-profile partnerships in past weeks, has a good chance of succeeding as a public company in the Internet marketplace. They point to Inktomi's broad range of offerings, including search technology and network-speeding software, as an asset.
"They're supplying the behind-the-scenes technology for the portal sites, and that's not a bad market to be in," said Zona analyst Jim Balderston. "The technology has a lot of different places it can play, a lot of different roles it can take."
Inktomi's Internet caching technology, a way of speeding up Web access by distributing copies of Web pages around the Internet, is used by several ISPs and America Online (AOL).
On the downside for Inktomi: the company does not yet have a significant revenue stream -- with roughly $12 million in annual income, it is not profitable -- and its caching technology is still in its infancy.