• by Laurie Sullivan  @lauriesullivan, June 18, 2009

In a move that is intended to drive traffic for advertisers like Volvo who took a chance on the fledgling company and bought videos ad based on a paid-search-cost model, Searchme.com has a plan to distribute more than 500,000 toolbars monthly.

The engine, which officially launched this week, serves up screen shots of Web sites in search results. The visual representation of the site makes it easier for the person searching the engine to differentiate between valuable and junk content on the other side of the click. Ads are identified in the queries with small type that read "Advertisement" above the visual search result.

On average, about 1,000 toolbars are downloaded daily, and about one-third of the search traffic on Searchme.com comes directly from toolbars, according to Randy Adams, Searchme.com CEO. "People install more than one toolbar on their browser," he says. "Publishers like CNet.com are more likely to work with us to distribute the toolbar than they are with Yahoo or Google because those engines have already saturated the market."

Adams believes consumers convert more easily if they see a visual representation of a paid search ad, rather than a line ad with a 25-character title and 50-character description. The display-like ads should generate higher revenue per search compared with other engines, which means Searchme.com can compete better in revenue-share deals with larger sites such as MySpace.com and AOL.com.

The paid ads work on an auction model similar to Google AdWords. The bidding algorithm is based on the bid and click-through rate. Advertisers bid on keywords. The ads are either static or video. For example, if Volvo bought its brand name for 25 cents, it could run a static or video ad, but another company could come in to buy the keyword "Volvo" for 30 cents and take the No. 1 ad position.

The site runs on a cost-per-click (CPC) model for the paid search ads, although they look like display ads that typically operate on a CPM model based on impressions. Searchme.com's click-through rate averages 8%.

Chris Westmeyer, search director at Outrider, a Group M/WPP company, says the agency has begun to place client ads on the search engine. Many of its clients are movie studios that would like to run trailers in the results. On Searchme.com, they can.

"I'm betting on this engine because they have the funding, the people are experienced, and they support their own database," Westmeyer says. Despite the fact that site traffic in June has been averaging 680,000 global and 170,000 U.S. unique visitors daily, he believes SearchMe.com has a solid business model that will last.

Searchme.com will not rely on search engine optimization (SEO) to optimize the site because it's based on Flash technology, Adams says. Instead, the site will rely on word of mouth, bookmarks and adoption of toolbars. Traffic is building, albeit slowly, and growth is about 50% per month.