Internet search and content company Yahoo has gambled $30 million and its future on its cooperative deal with Netscape, to produce the Netscape Guide.
The Guide, which helps users of the Navigator browser to surf the Net efficiently, is vital to Yahoo's future success. The company has not made a profit since its 1995 flotation on the Nasdaq exchange and reported a 1996 turnover of $19 million. But at the Hambrecht & Quist Technology conference in San Francisco this week, Tim Koogle, president and chief executive, revealed that the company paid $5 million to Netscape for the first year of their deal, which went live on 1 May. That figure will rise to $10 million - paid from advertising revenue - in the second year and $15 million in the third, assuming Netscape provides an agreed amount of Internet traffic to Yahoo sites.
"The launch of the Netscape Guide by Yahoo means more targeted Internet users and more ad opportunities," he said. "Ads are our revenue - we count ourselves as a media company like radio or TV broadcasters." The guide points surfers who hit Netscape?s home page to selected information pages - including Yahoo?s sites.
Koogle quoted bullish figures from market watchers Forrester Research that claim the Web advertising market will be worth $2.78 billion by 1999, although the same researcher said that market will only be worth $400 million this year.
"We charge two to seven cents per view of each page ad banner and we get an average of 30 million page views per day, so 20 per cent of our pages had ads," he said.
Last month Yahoo set up a local, customised version of its software, Yahoo Europe. IBM recently signed to advertise worldwide on Yahoo with different, tailored ads in each country. Koogle claimed Yahoo will soon sell many ads to companies outside the industry.
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