A rare ray of light broke through the clouds of darkness hanging over the internet sector today, when an internet advertising specialist tripled its first quarter revenues.
GoTo enables advertisers to pay for priority listing in internet searches.
The company is benefiting from the downturn in traditional advertising spend as companies shift their budgets into targeted and direct marketing media.
For the quarter ending March 31 2001, GoTo reported revenues of £36m, more than 200% up on the same period last year and a 31% increase on the fourth quarter of 2000
The Nasdaq-listed search engine operates through partners such as Freeserve, Ask Jeeves and AOL but is invisible to the internet user.
Companies pay to have their website listed at the top of the list of search results but consumers looking for a product or service are unaware of the manipulation.
Advertisers only pay for the listing if the user actually clicks through to their site.
Since its UK launch in November 2000, GoTo has attracted 3,000 UK advertisers - including Sainsbury's, British Gas and Thomas Cook - and it plans to expand in Europe.
The GoTo European managing director, Nick Hynes, who is a former Air Miles director, said marketeers needed to be increasingly clever during an advertising slowdown.
"During periods of tightness in advertising spend, companies move away from broadcast advertising to advertising where they can see a direct return - this has traditionally been direct marketing," he said.
"We are the ultimate form of direct marketing on the web. We give a measurable return and present no risk because advertisers only pay when they get a result," Mr Hynes added.
GoTo has enlisted 20 media buying agencies, including MediaVest, to promote its service to their clients.
The company intends to launch in Gemany in early 2002 and later roll out the service in France, Italy and Spain.
According to Jupiter Media Metrix, pay-for-performance searches account for just 1% of all internet advertising.
However, the advertising format is forecast to increase to nearly 50% in the next three to five years.
