Monday, January 26, 2004		Feature

Soon you may have e-mail@google.com
Lisa Baertlein

Google Inc., which dominates the market for Web search, is developing a service that could dramatically extend the reach of its lucrative keyword-based advertising by linking such ads to e-mail, those familiar with the matter said last week.

Privately held Google, which is expected to go public later this year, faces rising competition in its core search business from e-mail providers including Yahoo! and MSN. Adding an e-mail service would provide a potential boost to Google as its technology lead in the search market seems destined to narrow and it prepares to answer to growth-hungry shareholders, analysts said.

The Mountain View, California, company, which has recently made several e-mail related acquisitions, is working on a way to serve advertising to an e-mail at the moment it is opened, people close to the company said.

"I’m sure Google is getting more and more concerned about locking in users. It wouldn’t surprise me if they did something very sophisticated with e-mail," said Danny Sullivan, editor of SearchEngine Watch.com, who tracks the industry. By moving into e-mail — the Web’s most-used program — Google would open up a huge new market for its lucrative "sponsored links" advertising business that delivers ads tied to keywords in Web searches or on content pages, analysts said. Offering its own branded e-mail — whether for free or with enhanced services like spam filtering — would also enable Google to tie users more closely to its search site and to steal customers from rivals, they said.

Going portal

Google has for years said it would not turn its site into a full-service Internet portal like Yahoo! or MSN. However, since it opened in 1998, Google has added portal-style discussion groups and is testing a comparison shopping site called Froogle, as well as a news site.

Google late last year purchased rival Sprinks, which had technology to deliver ads to e-mail as the messages were opened. Such real-time ad serving is important because it keeps ads fresh and insures that Google will not be giving away free ads or delivering ads nobody will see, industry participants said.

Kanoodle, a small privately held search company, in the coming weeks will roll out its own e-mail advertising product as a part of its deal with CBS MarketWatch.com, Lance Podell, Kanoodle’s president of search and content, told Reuters. Under that deal, "sponsored link" ads will be served to MarketWatch’s opt-in subscriber e-mails, including newsletters.

Google already knows how to deliver its sponsored link ads — which are in the form of Web links and appear on the perimeter of Web pages — to e-mail newsletters and content sites. Furthermore, Google last year purchased an e-mail management software maker and in 2001 registered the domain name, googlemail.com.

Some in Silicon Valley also believe Google could be preparing to launch free e-mail to compete with offerings from Yahoo! and MSN’s Hotmail.

(Additional reporting by Reed Stevenson in Seattle)