Yahoo! is installing Overture as its new search advertising broker for its European properties. Which means that it is turfing out Espotting from most of its slots on Europe (Espotting contextualised results still appear on directories and in Scandinavia).

Espotting said the move was unsurprising, considering that Yahoo! now owns Overture. It has prepared for this day by expanding its affiliate programme. In September, this network generated one billion searches sans Yahoo! The UK company's previously quoted monthly search volumes (although it doesn't say when) were 850 million, and that included Yahoo! results.

In a statement, Daniel Ishag, Espotting CEO, said: "Since launch, Espotting has pursued a distribution strategy which does not make us reliant on any one partner. We have a large, diverse distribution network, which consists of both well-known brands and smaller, niche sites. Our aim is to provide our 20,000 advertisers with highly targeted traffic – advertisers are concerned about the quality of the traffic, not its source."

True enough, but the big portals deliver quantity as well as qualitity. Overture relies upon Yahoo! and Microsoft's MSN for more than 60 per cent of its revenues. Both are growth areas: Yahoo! can of course roll out Overture across more areas and territories.

MSN recently announcing its intention to junk Looksmart for contextualised ads in favour of an Overture/home-grown combo. At some point MSN will go fully inhouse, either through self-development or acquisition. Today the NY Times reported (reg req'd) that Microsoft had "approached Google within the last two months to discuss options, including the possibility of a takeover." Google rejected the approach, preferring to go the IPO route, the paper reports. But who is to say that Microsoft won't be back?

Microsoft is sticking with Overture for now because it appears to produce the best results for merchants, and hence for advertising revenues. In a Jupiter Research report of US paid-for search services released yesterday, Overture outperformed Google as the best paid listing service. Google is of course the new kid on the block, and it is bolstering this service through the acquisition of Primedia's Sprinks division, announced last week. "In the race for third place, Sprinks has built a very competitive solution," Jupiter says.

Is there room for fourth (or a third, now that Google is swallowing Sprinks)? Findwhat.com and eSpotting, currently tussling over price for a merger, and LookSmart, which will lose two thirds of its turnover when the MSN contract comes to end, will surely hope so. ®