Google, which prides itself on the purity of its search results, agreed to give favored placement to content from AOL throughout its site, something it has never done before.
If this is true, AOL will once again be the ramp over which a major company jumps the shark.
Update: Or, is this just a trial balloon?
Update 2 – There’s still time for the deal to fall apart, but it certainly seems set. Saul updates his story here, and even quotes me. From that:
“This is Google’s first test as a chess player in a major corporate battle,” said John Battelle….”They are saying, ‘We will take some of our pawns and block the move to our queen by Microsoft,’ ” he said. “Until now, Google has said, ‘We don’t think about our competitors. We spend all our time building better products for our users.’ “
And more details on how the deal unfolds:
Google has been providing Web search and search ads for AOL since 2002. In the new arrangement, Google will offer promotion to AOL in ways it has never done for another company, two executives close to the negotiations said.
If a user searches on Google for a topic for which AOL has content – like information about Madonna – there will be a special section on the bottom right corner of the search results page with links to AOL.com. Technically, AOL will pay for those links, which will be identified as advertising, but Google will give AOL credits to pay for them as part of the deal. They will also carry AOL’s logo, the first time Google has agreed to place graphic ads on its search result pages.
….Google will also provide technical assistance so AOL can create Web pages that will appear more prominently in the search results list. But this assistance will not change computer formulas that determine the order in which pages are listed in Google’s search results.
Google will also make a special effort to incorporate AOL video programming in its expanding video search section and it will feature links to AOL videos on the video search home page. These links will not be marked as advertising.
An executive involved in the talks said Time Warner asked Microsoft to give AOL similar preferred placement in advertising and in its Web index and that Microsoft refused, calling the request unethical.
Also very very interesting but not that played up:
Under the current arrangement, Google sells all the search ads that appear on AOL’s sites. This year, Google’s revenue from ads on AOL will be roughly $500 million, estimates Jordan Rohan, an analyst with RBC Capital Markets. Of that, Google will pay AOL about $430 million.
Under the new deal, AOL’s sales force will also have the ability to sell search advertising that appears only on AOL’s sites, even though those ads will compete for placement with those sold by Google. AOL’s sales force will also have the right to sell some display advertising that will be placed on the vast network of Web sites for which Google sells ads.