GoTo.com to Buy AuctionRover.com
While rival search engines try to reinvent themselves as all-purpose portal sites, Pasadena-based GoTo.com sought to bolster its core online search capabilities Thursday by agreeing to buy AuctionRover.com for $166 million in stock.
AuctionRover.com, an 8-month-old company based in Morrisville, N.C., scours online auctions on EBay, Yahoo and other sites and presents comprehensive search results to users. The proposed deal follows Goto.com’s $250-million acquisition in January of Cadabra Inc., a provider of retail comparison shopping services on the Internet.
With AuctionRover.com’s comparison shopping and auction features folded into GoTo.com, its users would be able to conduct a single search to research products, check prices offered by a variety of merchants and look for deals on secondhand goods on more than 50 auction sites.
“Consumers want to have it all in one seamless experience,” said GoTo.com Chairman Jeffrey Brewer.
The next logical addition to GoTo.com’s search portfolio is a service for business-to-business transactions, although the company may do a partnership instead of an acquisition, Brewer said.
Combining the comparison shopping features with the ability to search auction sites is “a great advantage,” but if it works, rival search engines would just copy GoTo.com’s innovation, said Paul Hagen, a Forrester Research analyst. Even as a multi-function search engine, GoTo.com would have a difficult time gaining ground against dominant portals like Yahoo, he said.
Investors seemed to agree, as GoTo.com shares fell $2.63 to close at $47.88 in Nasdaq trading Thursday. GoTo.com would pay for AuctionRover.com with 3.47 million shares of its stock.
AuctionRover.com is one of a growing number of Internet firms that churn through auction listings on a number of Web sites and summarize the results. It is the only major auction site that has a licensing deal with EBay, the largest auction company on the Net.
Indeed, San Jose-based EBay has tried to block many of AuctionRover.com’s competitors from searching its listings both by legal and technical means. Its actions have prompted a Justice Department investigation into possible anti-competitive behavior.
GoTo.com has long been a maverick in the search engine world. GoTo.com’s 2-year-old search engine does not divide sites into categories or recognize keywords. Instead, Web sites bid against each other to appear at the top of a list of GoTo.com’s search results, similar to how advertisers pay more to have bigger ads in the Yellow Pages. When a user clicks to a site, the site makes a payment--typically between a few cents to several dollars--to GoTo.com.
More than 21,000 Web sites pay for placement in GoTo.com’s search results. GoTo.com ranked 21st in Media Metrix’s most recent listing of the most popular Web sites.
The company lost $29.3 million last year on revenue of $26.8 million.
GoTo.com decided to expand into the shopping arena after realizing that more than half the searches being conducted on its site were about researching or buying products, Brewer said.
GoTo.com expects to close its deal with privately held AuctionRover.com in April.