Microsoft And Yahoo Ink Search Deal

Well, it finally happened: Microsoft and Yahoo have entered into a search and advertising agreement. Few will be surprised by this announcement, as it’s been in the works for at least 18 months. Still, many search engine marketers are optimistic about the future for these two giants.

In fact, when it comes to search, neither Microsoft nor Yahoo are giants at all.  Granted, Yahoo.com is still the most-visited site on the web, and Microsoft is, well, Microsoft. But in search, as we all know, Google is king. With Google’s market share hovering between 65% and 70%, it’s unlikely that the new MSFT/YAHOO partnership will unseat them any time soon. However, MSFT has been gaining share since they launched the Bing search engine in early June.

While Yahoo’s search traffic still exceeds that of Microsoft/Bing, it was Yahoo who was really losing market share, not Google – which is why this marriage makes sense.

Advertisers seem to feel that this is a positive step. According to ChoiceValueInnovation.com, the new website set up by MSFT and Yahoo, “For Web users and advertisers, this deal will accelerate the pace and breadth of innovation by combining both companies’ complementary strengths and search platforms into a market competitor with the scale to fuel sustained development in search and search advertising.”

In plain English, this is the best of both worlds. Yahoo has the traffic, but lacks a good PPC interface with which to harness the traffic. Microsoft, on the other hand, has robust PPC tools, including an offline campaign editor and targeting options that even Google doesn’t offer. What they don’t have is traffic. The combination of Yahoo’s traffic with Microsoft’s tools will result in increased economies of scale for PPC advertisers.

Many questions still linger, however. One big one for PPC advertisers is the question of customer service. The MSFT/Yahoo site says that “Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform, and prices for all search ads will continue to be set by AdCenter’s automated auction process.” What defines “premium search advertisers”? They don’t elaborate, but I suspect they’re referring to Fortune 500 companies. If so, that’s good news for the rest of us, as Microsoft adCenter has a far better customer service track record than Yahoo does.

Any way you slice it, this has been an exciting day for those of us in the search engine marketing industry. What do you think about the deal? Discuss it in the comments!