AOL, Google Broaden Search Pact

America Online has announced it will expand its relationship with Google and will use the search leader's technology as the foundation for enhancements to its own search offering.

Under the agreement, AOL Search will feature both search results from Google's algorithmic engine and sponsored links from Google's booming paid-listing service. Google will continue to provide sponsored links in AOL's business listings and Yellow Pages directories as well.

A strong search engine is key for AOL going forward, said David Gang, executive vice president of AOL Search, because more than 75 percent of AOL members use the search function at least once a month.

"Google's search function and targeted paid search listings have proven extremely popular with our users," Gang said. The new search function also is designed to provide results more quickly and to be easier to use, he added, with larger typeface and clearer navigation tools.

The expanded deal builds on a partnership forged by the two online giants in early 2002. By adding paid listings to its AOL purview, Google replaced Overture at that time, though Overture still remains a powerhouse with customers such as Yahoo and MSN. Likewise, Google will take over AOL's traditional search function from Inktomi, which Yahoo bought late last year.

Hometown Discount

AOL said its new version 9.0 will feature other search upgrades as well, including: more localized results; content delivered automatically based on ZIP codes already provided to AOL by customers; and a hot-topics feature that will tell AOL users what topics fellow members are searching for most often.

Yankee Group senior analyst Rob Lancaster said gaining access to AOL's membership could be a huge step forward for Google as it strives to gain the upper hand in what is likely to be a protracted battle for local search revenue.

"The major players have identified this opportunity and are taking steps toward claiming their share," Lancaster told the E-Commerce Times. Even though AOL's membership rolls are in flux, the company still possesses massive reach in the United States and overseas. "Even given AOL's troubles, that's still very valuable real estate for a search player."

Making Waves

The AOL-Google partnership announcement comes amid signs that further changes in the search landscape are imminent. For example, LookSmart has said it could lose up to 70 percent of its total revenue stream in the wake of Microsoft's (Nasdaq: MSFT) decision not to use it on its MSN search page, sparking speculation that LookSmart will be acquired by a larger player.

Also, in recent weeks, Amazon.com has made public a previously low-key attempt to devise its own search tools specifically tailored to e-commerce -- tools it plans to use on its own site and license to other e-tailers. And Yahoo has unveiled what it believes is a breakthrough in shopping search that combines the two types of search technology with browsing and comparison-shopping features.