The Yahoo and Microsoft Search Alliance

  |  June 7, 2010   |  Comments

A look at the what the Yahoo-Microsoft alliance means for search marketing advertisers.

An e-mail arrived in my inbox the other day from the "Yahoo and Microsoft Search Alliance," asking me to participate in a survey in order to improve my "search advertising experiences." This is a clear signal that the Search Alliance is working to revamp the search marketplace to best meet the needs of their advertiser audience.

This e-mail got me thinking again about the implications of this alliance. Since it's been nearly a year since I last covered the topic in the column, "The Yahoo-Microsoft Agreement One-Pager," - at that time the partnership was only a mere possibility - it's a good time to follow up. It has only been a few months since the alliance received regulatory approval to move ahead. Judging by the market research already underway, it is clear they are moving fast.

Alliance Overview

For those not familiar with the Search Alliance, Yahoo and Microsoft formed a partnership in the search space to attempt to provide a "competitive" offering in the paid search advertising marketplace (read: compete with Google). Key aspects of the alliance include:

  • Yahoo and Microsoft search inventory will be combined to create a larger search marketplace for advertisers.
  • Microsoft's technology platforms will be leveraged for both paid and organic search results, with the adCenter platform becoming the sole advertiser interface.
  • Yahoo will support large-scale advertisers and agencies, while Microsoft will service smaller, self-serve clients.
  • Display advertising and other offerings will remain separate, with the two companies continuing to compete.

Transition Timing

The transition is planned to begin in major markets like the U.S., with the alliance aiming to transition priority advertisers and partners in the U.S. prior to the 2010 holiday season. That's only six months away!

That said, expect the majority of the transition to occur over 2011, as the alliance has set a target to have all markets transitioned by early 2012 (24 months after regulatory clearance).

Implications of the Alliance

So what does this alliance mean for advertisers? In my opinion, this alliance will benefit most advertisers - large or small. Yes, there will likely be a relatively bumpy transition period no matter how hard the alliance works to avoid it. CPCs (define) are likely to increase as more advertisers jump on board and competition heats up. And organic rankings are likely to get juggled with any algorithmic and index changes.

All that said, the outcome of another truly viable option for search marketing will be worth any potential challenges or changes along the way.

MSN and Yahoo have historically driven cost-efficient results and strong conversion rates, but the low volume delivered has made it difficult to fully maximize these engines. Resources required to manage two additional campaigns that drive such little volume has not always been justified (e.g. why would I double my management time to only drive 25 percent more volume?). For that reason, Google has ended up as the default, because you are confident that it can drive the volume you need. Now advertisers will be able to confidently leverage this new search marketplace in addition to Google, and it may be a viable alternative to Google. One caveat: adCenter will need to be more competitive with its editing tools in order to compete with the ease of campaign management offered by Google (The search marketing specialists on my team swear by the Adwords Editor tool).

What does this mean for users? Consider Google. As the volume of advertisers employing AdWords has increased over time, so too - for the most part - has the relevance of the search results. Google has gotten better at rewarding advertisers, providing a positive user experience, and dissuading those providing a poor user experience. This should also occur with the Search Alliance. As more advertisers compete for valuable real estate, Microsoft will have to toughen its algorithm to maximize quality and relevance. Again, there may be a period of flux, but the end result should be just as beneficial for the user as we're anticipating it will be for the advertiser.

I'd love to hear your thoughts on how you think the alliance will play out -advantages, disadvantages, reactions, thoughts, comments - share your perspective!

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Julie Batten

Julie is a member of the senior strategy team at Klick Health, focused on online media and digital. Julie initially established and led the media practice at Klick for several years, relinquishing leadership to expand beyond media into additional digital tactics. She brings a wealth of experience in search marketing, digital media, and all facets of digital strategy to bear, helping Klick's clients develop innovative digital solutions. As her role has evolved, so have her contributions to ClickZ, which she has been writing for since 2007.

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