Time Warner’s AOL has launched a new paid search advertising service backed by Google’s technology to make AOL targeting easier for advertisers.

The AOL Search Marketplace was born as a part of the US$1 billion agreement between Google and AOL back in Dec 2005. One element of the deal allowed for the placement of Google AdWords links across the AOL search pages.

Mike Kelly, AOL Media President, said in a recent interview:

“If I’ve got a relationship with a big marketer and half of their interactive ad spending is going toward something I don’t offer (search advertising), I’m going to want to acquire that capability”

According to an upcoming press release:

AOL Search Marketplace uses a white-label version of Google AdWords, providing advertisers the ability to buy search advertising that solely targets the AOL Search audience on the AOL Client applications and AOL.com. This service uses the same best-of-breed functionality, features and reporting that advertisers have come to expect from Google AdWords. Until now, advertisers did not have the ability to segment and optimize traffic coming from AOL.

While AOL continues to generate strong revenue from its display advertising, it has fallen behind considerably in terms of paid search (pay-per-click) advertising revenue. As Google is the leader in the paid search revenue model, it makes sense for AOL to capitalize on this experience.

AOL underwent a significant restructure of its services last summer, with most of its services now available for free. With the increase in users and activity, this new AOL Search Marketplace should help them recoup some revenue from the increased traffic to their search services.

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