Yahoo! on Monday said it has bought Overture Service Inc for $1.6 billion.

Overture pioneered a pay-for-placement search engine.

"Together, the two companies will be able to provide the most compelling and diversified suite of integrated marketing solutions around the globe, including branding, paid placement, graphical ads, text links, multimedia, and contextual advertising," Yahoo chief Terry Semel said in a statement.

Yahoo! recently witnessed rough weather as its strategy of being a mainly advertising driven model fell apart.

The acquisition decision is aimed at making Yahoo! a more diversified company with several kinds of subscription and ad-based revenue streams.

Under the system employed by Overture, formerly known as GoTo.com, advertisers bid for the right to have their links displayed under specific search terms. The auction determines the order in which the links are displayed on a web page.

Overture, based in Pasadena, California, licenses its results to a wide range of websites including Yahoo! that take a cut of the fees generated whenever someone clicks on an advertiser's link displayed in a section typically labeled as 'sponsored results'.

Agencies