• by Kate Kaye , March 23, 2004

Kanoodle is branching out, and the search firm could uproot some of Google's business in the process. Kanoodle today announced an exclusive partnership with Microsoft Corp.'s MSNBC.com, which extends the reach of its contextually targeted sponsored links program by adding hundreds of new categories to its roster of content topics.

Beginning next month, through its ContextTarget service, Kanoodle will be the sole provider of sponsored links across MSNBC.com, which features original content in addition to content from its partners The Washington Post Co.'s Newsweek and The Washington Post, and NBC properties including Dateline and The Today Show.

"We're open for business for all advertisers," declares Lance Podell, president of Kanoodle.

Since its launch in January, the ContextTarget service has allowed advertisers to target ad listings based on less than ten content topics, all within the finance category. But starting last week, Kanoodle opened its expanded list of 215 topics, ranging from sports to health to shopping, to advertiser bids. "There's been a lot of pent-up energy, apparently," Podell says, adding that hundreds of advertisers have signed up to target ads based on the new content subjects.

Until now, ContextTarget links have run only alongside content from CBS MarketWatch.com, The Motley Fool, and Quicken.com. Now, in addition to running on these publisher sites, sponsored links from current advertisers targeting finance topics will run automatically along with MSNBC.com's finance content.

According to Podell, ContextTarget ads will be presented on MSNBC.com "above the scroll" on the right-hand side of full article pages in a sponsored links box that will include three to five text links.

At the moment, Google has a default monopoly on contextual search advertising, as the only formidable player to provide contextually targeted ads across a broad spectrum of sites. Google's AdSense system delivers sponsored links to countless Web sites and automates placement based on page text, which sometimes creates incompatible advertiser pairings. For instance, a reader perusing a NYTimes.com piece mentioning comic artist R. Crumb may encounter ads for his Coffee Table Art Book, or for CrumbSweepers.com's "Crumb Brushes."

"We haven't had good results from ads delivered across Google's content partners as opposed to their search partners," comments Brad Fallon, CEO of interactive marketing consultancy Smart Marketing Inc. "Google is the only game in town," he adds. "If there's another game out there, we'd certainly take a look at it. The market for that is very open."

Kanoodle contends that it can ensure contextual relevancy of its ContextTarget ads because editors confirm the appropriateness of links before ads go live. (This human filtering process usually takes about a day.) The company allows advertisers to choose content topics they deem relevant during the bidding process. In contrast, Google ads are approved and enabled after going through an automated filtering process, and are eventually scrutinized by human eyes.

"Kanoodle's ContextTarget ads rely on a topic-based, rather than keyword, targeting system that allows for a greater level of relevancy," asserts Charlie Tillinghast, acting general manager, MSNBC.com. Tillinghast compares Kanoodle's system to Google's AdSense, which he says can't contextually block ads from certain content, such as stories about plane crashes. "Kanoodle offers multiple forms of ad blocking, by URL and category, guaranteeing that only suitable ads run on their partners' editorial pages."

With only four official publisher partners running its contextually driven sponsored links, Kanoodle is by no means a serious threat to Google's AdSense business at this point. And while the company doesn't expect to become the behemoth that Google is, Podell insists his firm wants to compete. Other publisher deals are "in the hopper," he says, emphasizing that "Google has a lot of traction--but it's a marathon, not a sprint."