Advertisers Welcome Possible Yahoo Sale, But Fear CPM Hikes

  |  February 4, 2008   |  Comments

Marketers hope Yahoo's advertising savvy will rub off on Microsoft, but fear price increases.

Much coverage of Microsoft's $44.1 billion bid for Yahoo has focused on the search implications, but the pairing affects display advertising as well. In terms of raw impressions, a combined Microsoft/Yahoo would traffic 59 percent of all U.S.-based display ads, according to Nielsen.

That inventory would come from many buckets, including portals MSN and Yahoo, ad network BlueLithium, Right Media's exchange, aQuantive's DrivePM network, AdECN and both parties' expanding network relationships with the likes of Viacom, Facebook, Digg, and WSJ Digital. (Yahoo owns BlueLithium and Right Media; Microsoft owns aQuantive and AdECN.)

For media buyers that's mostly a good thing, giving them more reach for their targeted buys than previously available in one place. But agency execs also fear the specter of price hikes, as ever more U.S. Web ad inventory is concentrated with just one seller.

Jeff Marshall, SVP Digital Managing Director at Starcom IP, is among the concerned. "You always have to question when supply gets consolidated, is control shifting to that side?" Marshall said. "Then, are they going to wield that control to manipulate pricing?"

But Marshall said the potential deal's upside -- better targeting based on behavioral and registration data -- outweighs the dangers for now.

"We're still in such an early stage of digital marketing that this consolidation only helps us in being able to add efficiency to operations," he said. "When you can aggregate that [data] across those two major media companies, that becomes really interesting."

Agency.com San Francisco media director Allen Stern is similarly conflicted. "I'm disappointed from a media buying perspective, because I like to play them off each other," he said. "Our concern is CPMs increasing. That's the big negative to this whole thing."

"But would that have happened in two years anyway?" he continued. "We definitely don't want to see Yahoo go away. It seems like a marriage that has to be."

While Microsoft has clearly put huge emphasis on building its ad-related offerings over the past two years, there appears to be a consensus that the company isn't as polished as Yahoo when it comes to serving the needs of advertisers. Execs were optimistic on Friday that Yahoo's savvy might rub off on its would-be parent.

Additionally, Microsoft has moved slower than Yahoo in integrating its ad network purchases, and has even lagged on industry standard practices like frequency capping.

"We should've seen more integration by now," Agency.com's Stern said, referring to Microsoft's aQuantive buy. "With BlueLithium and Right Media we saw pretty instant integration on the Yahoo side."

Starcom IP's Marshall is slightly more forgiving.

"Yahoo just has a head start," Marshall said. "I've been really encouraged over the past couple years in how Microsoft has been able to catch up. Yahoo is a little ahead in terms of understanding the language of advertising. The fact that Microsoft [is doing this] shows they understand that advertising is becoming a much bigger part of their business."

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ABOUT THE AUTHOR

Zachary Rodgers

Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects. 

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