Summary
The announcement of today's 10-year paid search marketing partnership between Yahoo! and Microsoft / MSN / Bing could substantially alter the online advertising landscape. A paid search marketer with significant monthly spending on both of those platforms and Google provides his thoughts on what this deal might mean to advertisers.
Analysis
Overall, this transaction is certainly being looked at with enthusiasm (and of course some skepticism) from across the online marketing industry. Nearly every spends a substantial share of their wallet with Google and while Yahoo, MSN and other services have helped add incremental value, there is no alternative right now. Google is a unique and very challenging partner to work with, so the potential emergence of a genuine competitor is certainly causing excitement.
Some quick thoughts on what this could mean:
- First, we are digesting the fact that Yahoo and Microsoft state that this partnership could take two years to be fully implemented. Given the scope and scale of the technologies involved, that doesn't seem unreasonable, but it is an eternity in a fast moving industry that itself isn't quite 10 years old. What will happen during those two years? What and when will the incremental steps be?
- For ourselves and many of our colleagues, MSN/Bing has often driven the highest return-on-investment. However, we just haven't been able to spend enough money to often make it worthwhile. Yahoo, meanwhile provides traffic that is sometimes great and sometimes lousy, depending upon the category and campaign. We are very curious to see if the blended audience will perform more like MSN's, Yahoo's or something in between. Will advertisers still be able to target or segment the Yahoo and Bing audiences separately?
- One of the reasons that Google has been so successful is it's unrivaled advertiser user interface. It is dramatically more sophisticated than those offered by Yahoo or MSN, yet also substantially easier to use. Yahoo has an incredibly poor user interface that no one will ever miss. MSN's is better than Yahoo, but still widely trails the ease and power of Google's. Google does so well in part because they make it so easy for advertisers to spend money. Advertisers will all be happy to have one fewer (poor) interface to deal with, but Microsoft still needs to make substantial strides in usability.
- Short term, this will have no impact on Google. Longer term, we would highly expect more share of wallet to go to Yahoo/MSN (provided they can execute of course). Most buyers have avoided Yahoo and especially MSN because the time investment is the same no matter how much money you are spending. Now that you will be able to get very meaningful traffic volume from a source other than Google, this hurdle seems to go away.
- As advertisers go from managing three platforms to two, resources may be freed up to more fully work with other platforms. Facebook Ads, MySpace Ads and Ask.com could all be secondary winners from this deal.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
