Founded by idealab!, a Pasadena, Calif., venture that assists digital startups, GoTo is selling its search results with a model that will let advertisers bid for the highest placement in keyword results. Marketers pay per click, with all search results sorted by bid; every result will bear the price of the bid and results will be updated every 15 minutes.
"We think this is going to be revolutionary," said Bill Gross, founder and chairman of idealab! and GoTo, who debuted the search engine at the Technology, Entertainment & Design conference on Feb. 21. To date, directories such as Yahoo! use a team of editors to categorize sites alphabetically, a process which Mr. Gross argues is slow given the spate of sites being released everyday. Meanwhile, search engines rely on algorithms, which he contends, are flawed because they are often bogged down with personal sites rigged to appear at the top of search results. For example, he said, a recent search for "books" on AltaVista didn't pull up Amazon.com in the first 100 results.
Charter advertisers include Isuzu, Mining Co., Shopping.com, eToys and Wedding Channel. Mr. Gross said that while many of the advertisers initially rejected having a price listed on results, 80% came around once they realized pay per click was a cost-effective solution and that having listed prices was the only way to conduct stock market-styled bidding.
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Search results for nonpaying sites, he added, would be included at the bottom of search results with a 0.0 cents click-through rate.
Jerry Michalski, managing editor, Release 1.0, a newsletter published by edVenture Holdings praises the idea as innovative, but questions whether it's too late to develop a brand name or whether advertisers will have the time to keep up with the bidding.
"I think it's really hard to stake new share of mind at this point," Mr. Michalski said. But he added the functionality is worthwhile and will probably find its way into other products, perhaps licensed or purchased by a larger search engine company.