Over the last few months I have been writing articles on how the advertising business model on the Internet has collapsed.  You just have to look at how many dot com companies that depended on advertisers have gone belly up.

In case you don't know, this is have the advertising business model basically works:

A company creates s web site that offers loads of free content that will generate a lot of traffic.  With this traffic, the company hopes to sell banner advertisements and make a profit after paying all the web site costs.  This model is what propelled major search engines such as Yahoo and Altavista to early financial success.

But that was a long time ago.

Since then, major search engines such as Infoseek have disappeared and just recently Excite.com has filed for bankruptcy.

Lets face it, the dot com boom that was based on this model is long over.

Yahoo as been suffering lately and some of their recent changes seems to be shifting from this model.  For example, Yahoo used to practically beg you to submit your web site for possible inclusion into their directory.  They changed this and started charging a $299 fee to have your web site reviewed.  Also, this did not guarantee that you site would be listed, just reviewed.

Now, just recently they have released a new policy that require web sites listed after December 28, 2001 to have to pay a reoccurring $299 fee just to have your listing remain in their directory.

Sounds like the Yellow Pages!

All the major search engines are now desperately trying to stay alive during these turbulent times.

But there has been one company that has been reaping the benefits of the current economic environment because they never built their business using the advertising business model.

Overture.com (formerly known as Goto.com) is a pay-per-click search engine that allows users to bid against in each other in an auction like environment for listings in their directory.

At first, people laughed at this concept commenting

"Who the heck would pay to be listed on a search engine!"

But, who is laughing now?  Successful pay-per-click search engines are making a bundle because advertisers rather spend advertising dollars on guaranteed results.  The money that used to be poured in banner ads is now being deposited into bidding accounts and major pay-per-click search engines all over the Internet.

Not only is Overture.com the largest pay-per-click search engine on the Internet by far, they also provide search listings to major search engines such as Yahoo, Altavista, AOL, etc.  They claim to reach close to 75% on the Internet market.

That is huge!

Excite.com recently went bankrupt and was bought out by Infospace.com.  Their entire search directory is now powered by Overture.com.

How do these partnership's form?

Simple.  Overture.com is paying this big search engines a certain percent of the bidding amount of each listing when they are clicked on.

Think about this concept for a minute.

It does not cost Overture.com anything for this arrangement. They are getting a smaller cut of the bidding amount compared to nothing if they never partnered themselves up in the first place.  It is only costing the advertiser who will be thrilled with an increase in traffic that these partnerships generate.

It is a win-win situation for both companies.

For example, the current bidding amount for the keywords "email marketing" at Overture.com is $3.84.  If Overture pays Yahoo a 50% payout of the bidding amount, Yahoo will earn $1.92 every time the link is clicked on from their site.

Sprinks.com and Searchfeed.com recently got into the same act and now give any average Internet user the ability to earn a percentage of bidding amounts from their listings.

Watch the other pay-per-click search engines to follow soon.

Pay-per-click search engines that are currently paying affiliates a cents per search commission will soon realize that this does not guarantee profits.  Sharing revenues with partners will soon be the norm because it only costs the advertiser.

For now, Overture.com is the leader in this area and already has a monstrous share of the Internet search market because of their key alliances.

Although Overture.com charges a minimum five cent bid per keyword, advertising on their search engine could be very profitable if you have a product or service with a good conversion ratio.

Watch for Overture.com to become an even bigger player (monster?) in the Internet community because they continue to develop strategies that are based on sound business models that are not very risky.