Overture Services ( OVER) danced a little victory dance on Thursday. The pay-per-click search engine has landed a three-year-deal to serve as exclusive paid-search provider for three online properties operated by AOL Time Warner's ( AOL) CNN. Coming the same week after Overture announced its official launch in Japan, the CNN deal helps Overture defend itself against sniping in the market that its profits and revenue growth are threatened by competitors in the pay-per-click advertising business such as the privately held Google. Though outsiders haven't been able to quantify the direct relationship between Overture's specific business partners and the company's future financial performance, Overture's share price has moved sharply this year on news of the gain or loss of certain distribution partners for Overture's service. Thursday was no exception. Overture's stock jumped on the CNN news Thursday morning, rising $2.18 to $27.68. Down 36% from their 52-week highs, Overture shares have bounced between $20 and $30 for most of the year. As part of the new agreement, Overture will provide CNN.com, CNNSI.com and CNNMoney.com with up to five entries from its paid-search listings each time a visitor to the site uses the search boxes placed throughout the sites. Under Overture's paid-search model, advertisers bid on specific search terms relevant to their businesses, such as "cars" or "Las Vegas hotel." When an Internet user searches for a particular term, Overture returns links to advertisers who have bid on that phrase, in order of the size of their bids. Only when a user clicks on an advertiser's link does that company have to pay Overture, which shares its revenue with the sites on which its search engine appears. Overture's listings will debut on CNN's sites in about three weeks, says Bill Demas, general manager of Overture's affiliate business group. Currently, home-page search boxes on these CNN sites conduct only site-specific searches. Google provides Web listings through a search linked to the initial CNN results.
Overture's exclusivity means that CNN won't be using Google's Adwords pay-per-click keyword advertising program, says David Payne, senior vice president of business operations for the CNN News Group. A CNN spokeswoman said an announcement about the provider of nonpaid search results under the new setup would be made within a few weeks. From a competitive standpoint, Overture was happy to remind the market that CNN's parent company is AOL Time Warner. Overture's shares tanked earlier this year on news that the AOL online service dropped its U.S. affiliation with Overture in favor of Google; meanwhile, Overture has a three-year agreement with AOL covering its European properties. On Wednesday, Overture announced its ahead-of-schedule launch as a major paid-search provider in Japan. On a more ambiguous note, Overture said Monday that its agreement to provide pay-per-click results for the U.K.'s Freeserve had been "automatically" renewed until February of next year. Overture had been negotiating with Freeserve to extend their partnership, which was set to expire in November; the status and outcome of those negotiations are unknown. "From a momentum stadnpoint, this has been a great week for us," Demas said.