Microsoft-Yahoo! a Done Deal, Now What?

Picture 21You can see the press release here and SEL’s live blog of the press conference here. Here’s Yahoo! CEO Carol Bartz’s post at Yodel Anecdotal. And here’s lots and lots of discussion on Techmeme.

The terms are all laid out in detail in the release, with some color provided in the live blog entry and related posts.

Basically Bing and adCenter become the algo and paid back end for Yahoo! Search (what happens to YOS-related search initiatives? unclear). Yahoo! will handle sales of “premium search.” All the self-service paid search will be direct through adCenter. Yahoo! controls the UI on all Yahoo! properties. Search will be “powered by Bing.” I discuss mobile (basically a mirror, but not 100%) at LMS.

Microsoft is guaranteeing revenues to Yahoo! Yahoo! is turning over search to Microsoft essentially though it “owns” the user experience on its properties. The combined Yahoo!-Microsoft marketplace will represent roughly 30% of search in the US, lower outside. Ads will appear on both properties.

There will be regulatory hurdles in the US and Europe but it will probably be approved ultimately. It will be tough for Google to argue directly against this given the company’s dominant position. However there are “abstract” anti-trust arguments to be made.

Some people at Yahoo! will lose their jobs or be hired by Microsoft. Execution will take up to two years assuming regulatory approvals.

Impact on local? Probably not much in the near term. Greater scale and reach will appeal to advertisers doing geotargeting. It’s not clear whether ATT-YP.com will see any benefit (they’re MSFT’s local ads partner for search monetization). SMBs won’t see any immediate changes or difference. All the challenges of reaching SMBs remain.

How does this affect Yahoo!-NP consortium? Presumably not at all or they will get access to greater reach via search market. Should bring more efficiency to Local SEMs now only working with two platforms (Google, Microsoft/adCenter).

This is the deal MSFT wanted before, with different financial terms. Yahoo! gets guaranteed revenues over 10 years (less after 5) and reduced costs. But Yahoo! is essentially out of the search business.

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Photo Provided Courtesy of Yahoo!/Microsoft

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11 Responses to “Microsoft-Yahoo! a Done Deal, Now What?”

  1. Tim Cohn Says:

    Its not very clear to me as both a Microsoft and Yahoo advertiser how this will impact my account management process, when it will occur or what if anything I will have to change.

  2. Rich Rosen Says:

    I wonder if we will see more of these deals from msoft? With a Bing-powered back-end, yellow pages publishers such as Idearc and RHD, or newspapers could focus on sales and marketing. The cost of maintaining a competitive, independent local property / IYP is too great, and dooms the publisher to mediocrity and/or losses. Outsourcing the back-end and operations would enable many publishers to remain competitive and reduce costs. These deals would make sense, but is msoft likely to try to integrate more than one partner? I think msoft should make this a strategic imperative and aggressively recruit media partners.

  3. Greg Sterling Says:

    Interesting idea Rich. It’s a better deal for IYPs in that way than Yahoo which puts itself at a competitive disadvantage over the long term with this deal

  4. matt marton Says:

    “Should bring more efficiency to Local SEMs now only working with two platforms (Google, Microsoft/adCenter).” THANK YOU…now hopefully soon adCenter will release its desktop app for Mac OS X

  5. Ken Says:

    Whether the combined entity has 28% share or 18% mean much if dominant player would not lose any share?

    Does anybody know what this premium search/advertising thing is?

  6. Greg Sterling Says:

    This deal is not threatening, assuming it goes through, to the consumer side in the near term. It will make a more formidable competitor on the advertiser side. Over time if there is indeed innovation we could see Bing and/or Y! grow search share but that’s much more speculative.

  7. Krishna Santani Says:

    This agreement would definitely provide a much needed momentum to Bing in terms of traffic as large scale traffic is mandatory in order to learn what people search for. Its tough to say for now that whether this move would eat away Google’s market share but without doubt this will be good for consumers as competition is always healthy

  8. Greg Sterling Says:

    Premium search advertising means selling to large accounts, large advertisers.

  9. Ken Says:

    IMHO, Bing cannot win unless Google makes big strategic mistakes which seems impossible. In the previous episode, Altavista ruined its results by artificially inflating paying sites plus Yahoo gave way to a little startup the visibility that they can only dream of. What do you think this time that market leader do to give way to underdog?

  10. gebelik Says:

    i like this site. i added on my bookmark i thanks

  11. john spatafora Says:

    Hi Greg and others…………..where or whom is going to be selling the ad space/ppc to SMB or national customers. My expirence has yet to really see a Google/Yahoo/MSN or any other large search engine company with a dedicated sales force. Will it be resellers, such as yellowpage publishers, or ad agencies/sem companies?
    Or will the customer be encouraged to drop by the ad center, log in, and take care of business themself? I admit, stricklry a self serving question, yet I never see job posting from the Big # (Google, Yahoo, and whomever) recruit for sales. I even spent a raining 1/2 day searching all over for sales opportunities for Bing. Granted, the Yankees were on and perhaps something of relevance flew by.
    Any help appreciated

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