One hundred hours later, opinion makers still can’t agree on whether Yahoo’s search ads deal with Google was a brilliant move long overdue or the beginning of the end.
For those in the latter camp, perhaps the most stinging indictment came from Joe Nocera, who wrote in the Times that Yahoo has “chosen to become a pawn of the most dominant company on the Internet.” That’s a strong remark, given the deal allows Yang & Co. to retain a control lever they can use to ratchet up monetization when flagging earnings seem to call for it.
The more they use that lever, the less pleased marketers will be. Many fear price hikes as Google boosts its control of search ad spending to 90 percent or more. Increases are probably not around the corner however, except insofar as advertisers give up on Panama and spend more on Google, thus bidding keywords higher. Under that scenario, Google will encounter less pressure to create competitive value for advertisers. That could manifest in higher campaign costs down the road.
As distasteful as Google’s embrace is to Yahoo, it’s nothing compared to what Microsoft’s feeling — especially given it lit the fuse on the bomb that just blew up in its face.
Indeed, if the six-month drama surrounding Yahoo’s fate were a drawn-out Looney Tunes episode, the screen would now display a blackened Wile E. Coyote (Microsoft, a.k.a. Eatibus Anythingus) moments after an elaborately concealed explosive device detonates on top of him. The singed coyote can only look on in despair as Road Runner (Google, a.k.a. Hot-rodicus Supersonicus) casually polishes off the platter of bird seed laid as bait. The comparison breaks down a bit at this point, since Yahoo clearly has to be both the pile of Acme brand TNT and the bird seed.
Whatever. The big question now is, what’s Wiley planning next? It was only a year ago that its loss of DoubleClick in a fierce bidding war with Google drove Microsoft to hotly pursue a purchase of much larger aQuantive. There is no acquisition target bigger than Yahoo, but many smaller snacks remain on the table — for instance AOL, Facebook, ValueClick, AdBrite, Tribal Fusion, and Specific Media.
Finally, many believe an eventual acquisition of Yahoo is still very much in the company’s plans, and that Yahoo’s Google deal has merely bought it time. It’s entirely possible regulators will block the relationship on anti-competitive grounds, in which case pressure will mount for Yahoo to return to the negotiating table.