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Search engines shift gears to increase profits

In this story:

'Pay-for-position' formula

Concept catching on

Others adopt similar system


SAN FRANCISCO, California (AP) -- Although the average Internet user tends to view them generically, online search engines are not all alike.

So Web surfer beware: Ignore the differences -- and you won't know what you're missing.

Knowing how search engines work is more important than ever now that money-losing search companies are increasingly making business deals that affect their products' results.

In an effort to turn a profit after years of unbroken losses, more search engines and directories are imposing listing fees to separate the wheat from the chaff in an ever-expanding Web that now has more than 2 billion pages and 14 billion hyperlinks.

Typically, commercial sites pay to ensure that search engines check their sites for updates more frequently than other, non-paying sites. But some search engines also rank the search results according to how much money Web sites have paid for the privilege.

As well, technology still plays a leading role in the quality and quantity of results. The most comprehensive search engines -- Google, Inktomi and AltaVista -- rely upon complex algorithms to sort through millions of variables and spit out search results in an instant.

Search directories -- such as Yahoo!, LookSmart and Netscape's Open Directory -- rely on humans to review and categorize the best of the ever-expanding Web. But mere mortals can't possibly keep up, which is another reason why capitalism is entering into the search equation -- and swaying the results.

'Pay-for-position' formula

Pasadena, California-based GoTo has grown into a major search engine by using a "pay-for-position" formula that lists sites based on how much they bid for a prime spot in a variety of categories.

Mountain View, California-based Google -- which replaced Inktomi as Yahoo's search engine in June -- is one of the few search engines that shuns pay-for-position and pay-for-inclusion. Google executives say those formulas make it more difficult for people to find potentially valuable information, like cancer research, on the Web.

Larry Page and Sergey Brin
Google's co-founders, CEO Larry Page, left, and Chairman Sergey Brin, rest on bean bags at Google's headquarters. Google is one of the few search engines that shuns pay-for-position and pay-for-inclusion  

"We have taken a very strong stance that our search results represent our editorial integrity," said Google CEO Larry Page.

Ranking high in search results is critical because sites listed after the first displayed page are less likely to get clicked upon and draw traffic. Pay-for-position strategies also reduce the chaff by producing results limited to Web sites that are willing to pay for -- and are prepared for -- the heavy traffic search engines can bring.

GoTo CEO Ted Meisel said the concept is tailor-made for commerce-related requests, which now make up nearly 50 percent of the 100 million queries made on U.S. search engines each weekday.

"We are putting the power of the free market to work in search," Meisel said. "We make (Web sites) put their money where their mouth is and compete fairly for business."

About 32,000 businesses pay to be listed on GoTo, paying an average of 21 cents for every visitor generated by a search. That's a bargain compared to the cost of banner ads, which run about $5 for each customer lead, according to the investment banking firm Lazard Freres & Co.

Concept catching on

The concept is catching on. Since September, the search engines at AOL, Lycos and AltaVista have agreed to start listing GoTo's pay-for-placement results as part of their package.

Most other search engines don't auction off the pecking order of their results, but more are charging "pay-for-inclusion" fees, meaning sites must pay money to guarantee they will be indexed in a database. The payments don't affect how they are positioned in the search results.

LookSmart, a leading online directory that feeds its index to many of the top search engines, has been leading the pay-for-inclusion movement.

The San Francisco, California-based company charges a $199 fee to commercial sites that want to be included in LookSmart's index within two business days. Sites willing to wait seven to eight weeks for inclusion pay $79. Sites still have to meet LookSmart's editorial standards to be listed in the directory -- pornographic and hate sites are blocked.

"If you have any kind of business based on real economics, you can do the math and see that this (service) pays for itself in a short period of time," said Scott Stanford, LookSmart's vice president of listing services and e-commerce.

LookSmart's staff of 200 editors also continues to review and list nonprofit sites, but these sites no longer receive the top priority.

Others adopt similar system

Inktomi Corp., which provides the search engines at iWon and AOL among others, also recently adopted a pay-for-inclusion system that bases its fees on how frequently businesses want their sites examined for new features.

The Foster City, California-based company continues to compile the content contained on most Web sites at no charge. Of the roughly 500 million documents in Inktomi's index, fewer than 1 million are currently derived from pay-from-inclusion fees, said Troy Toman, general manager of Inktomi's search division.

"We look at this as a chance to offer enhanced services, not to replace any of our existing services," Toman said.

Although considered less discriminating than the pay-for-position formula, the pay-for-inclusion model also affects search results. To understand why, think of a search request as a lottery.

The more money a Web site is willing to pay for inclusion, the more lottery tickets it gets. And that will significantly improve its chances for a high ranking in the results.

Danny Sullivan, an analyst for, said not even Google is as pristine as a lot of search enthusiasts believe.

This year, Google began linking its search results to advertising tied to the topic of a query. For instance, a search query mentioning flowers might generate a series of florist ads at along the top and the side of the Web page.

The nearly 6,000 servers Google uses to explore what's on the Web each month also pull information from pay-for-inclusion directories.

"It's getting harder to identify a pure search engine," Sullivan said.

Copyright 2000 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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