“We turned the corner in 2000. We are the only profitable search engine. Period,” says an optimistic Craig Pisaris-Henderson, FindWhat’s president and chief executive officer. “As more and more people learn about us, we will only get more profitable.”

FindWhat, a public company traded on Nasdaq, reported $5.4 million in revenues in the third quarter of this year, a 23 percent gain over the previous quarter. The first nine months of 2001 saw $12.5 million in revenue, up from $1.3 million during the first nine months of 2000. The company’s projection for fourth-quarter revenue is $6.25 million, bringing projected 2001 revenues to $18.75 million, an increase of 550 percent over 2000. It is predicting annual revenues will reach $30 million in 2002.

“Their profitability is unusual compared with other businesses in this space,” says industry analyst Whit Andrews of Gartner Inc. “There’s a lot of flatness in the market. It’s a hard time to be in the search business.”

Pisaris-Henderson, a Fort Myers native, co-founded the company in 1998 as an online marketing business known as BeFirst.com. It developed a pay-for-position search engine called FindWhat, launched in September 1999. The company name was subsequently changed to FindWhat.com. Today its Gateway offices in Fort Myers house about 65 employees, and 10 workers are based in New York.

The company is counting on the market to adopt its pay-per-click approach to online advertising. Here’s how it works: FindWhat advertisers bid on certain keywords relevant to their business. The higher the bid, the higher the placement on FindWhat’s search results. The advertiser then only pays its bid price each time a customer clicks through to its site.

“It’s a high return on investment for the advertiser,” says Pisaris-Henderson, 31. “They don’t pay unless they get click-throughs. It’s the perfect advertising model in terms of what the advertiser would like to see.”

This methodology produces extremely relevant results for e-commerce-oriented searches, and drives highly qualified traffic to FindWhat’s advertisers, according to the company’s Web site. The advantage for the consumer is no clutter, no redundant information and no wasted space. The company claims that it has positioned itself not as “another ‘everything and the kitchen sink’ Web portal,” but as a “lean-and-mean search engine.”

The Future of Online Marketing

The business of advertising on the Internet is changing. Banner ads used to be the only way to go. Cost to the advertiser was based on “impressions,” the number of times a banner ad appeared, regardless of how many times customers actually clicked on the ad. The proliferation of banner ads and the more irritating and intrusive pop-ups and interstitials—ads that jump out at you between pages during an Internet session—has given the online marketing industry a bad image. Internet users hate the ads (igniting a market for ad-blocking software), and advertisers question the effectiveness.

Consequently, Internet ad revenues have plummeted, putting many ad-supported Web sites out of business. Pisaris-Henderson contends that the old model—impression-based banner advertising—did not offer a good return on investment. “Advertisers are looking for alternatives that work,” he says.

Some industry watchers, however, are not yet convinced that FindWhat’s concept will work. The question is whether customers want all possible results when they do a search, or only those companies who have paid to be included. FindWhat has to convince customers that the infomercial world is the way to go, notes Gartner’s Andrews. Some customers are suspicious of the “we show you what we’re paid to show you” approach, he says, noting that FindWhat and other pay-for-position search engines must demonstrate that “they do not pollute the user’s perceptions of a search engine’s integrity.”

“The reality of the online advertising market is that companies want to advertise if they find something that works,” says Pisaris-Henderson. “Advertisers are coming to us. We are not calling them and convincing them. They are calling us.”

As of the third quarter of 2001, FindWhat had approximately 12,400 active advertisers, up from 10,200 the previous quarter. The FindWhat search engine generated 36 million paid click-throughs in the third quarter of 2001, averaging 15 cents each in revenue. “It really does provide you with a fairly robust revenue stream,” says Andrews.

If the idea of pay-for-position searches does catch on, then FindWhat will face yet another problem, predicts Andrews. The market giants, such as Yahoo, AOL, and Microsoft, will adopt it, perhaps leaving FindWhat in their blinding dust. But that’s not likely to happen anytime soon. FindWhat’s more immediate challenge is just getting its name out there. At this point, they do not have a whole lot of market presence, says Andrews.

FindWhat’s strategy is to align itself with high-profile distribution partners. FindWhat distributes its listings to third-party search engines and other high-traffic Web sites, including Excite.com, Webcrawler.com, CNET’s Search.com, and InfoSpace’s MetaCrawler and Dogpile. In return, FindWhat shares its revenue from paid click-throughs with these sites. Users of CNET’s Search.com, for example, will get search results from a number of search engines, including FindWhat. “A lot of people have used CNET for a long time,” says Pisaris-Henderson. “We are leveraging their brand awareness with our product.”

For the moment, the strategy appears to be working.

Susan Holly is a freelance writer based on Sanibel Island. She writes frequently about technology.