As widely reported by many press sources (including the BBC), Microsoft and Yahoo! have finally struck a deal to combine forces against Google. This much anticipated and expected move has been dragging on for over a year and the final agreement just involves the search side of Yahoo!, rather than a full takeover of the business, but it still results in a significant change in the search market.

The 10-year deal will mean that Microsoft's new Bing search engine will now power the results on Yahoo!, although Yahoo! will retain control of how the search results are displayed. Microsoft will gain access to Yahoo!'s search technology and the PPC advertising platform will move to Microsoft's AdCenter system, but Yahoo! will retain responsibility for selling the search advertising across both networks. Display advertising will remain under the control of each company.

Yahoo! will receive 88% of search ad revenues generated by Yahoo! sites and, together, the 2 companies hope that by combining their technologies they can make a greater dent into the search dominance of Google.

So what does all this mean? Probably very little in the short term as the deal needs to be approved by the authorities and also there will be a major logistical challenge to transfer Yahoo!'s PPC advertiser accounts across to the Microsoft service. However, in the long term this should benefit advertisers who have found the Yahoo! PPC service slow and hard to use, whilst Microsoft's service has been praised, yet limited by market coverage.

In the long term the combination of these 2 search services will mean a further focusing of search through a few routes. The impact on the search market will be mostly felt in the US where the combined strength of these companies will impact nearly 30% of the market, yet in many other countries, Google's complete dominance of search activity will not be greatly affected.

The further reduction in search competition is a shame, but it should be a benefit for PPC advertisers to use the better AdCenter system for non-Google search services. It's also a tragedy for Yahoo!, one of the pioneers of web search and directory services, that it has now lost its once powerful position in this market and will need to rely on its other consumer portal services. Over the years Yahoo! acquired some of the original leading players in web search, such as Inktomi and AltaVista, but some of this technology - if it was developed over recent years - may now help to evolve the quality of the Bing search engine.

For Microsoft, this move is what it has been waiting for and gives it the best opportunity to take on Google for greater market share of search. Whether they can use the share that they will get from Yahoo! in the USA to their advantage and to innovate and grow their user base remains to be seen.

Of the many news articles and comments that have followed this announcement, Danny Sullivan has written A Search Eulogy for Yahoo! and Search Engine Watch has highlighted the advantages for search advertisers.

Labels: microsoft, search business, yahoo

Further new developments from Yahoo! have been reported widely in the press, including by the BBC. Available in the US initially, Yahoo! has changed its home page to give users a new, customisable format which lets them link to third parties like Google and Twitter. The aim is to make Yahoo! a stronger destination site that will provide users with a starting point for their web experience and thereby increasing visits to the Yahoo! site in the face of increasing competition, particularly following the recent launch of Microsoft's new Bing search tool.

The focus on the new interface is on personalisation, with the most notable change being a bar on the left hand side of the page, called My Favorites. Users can customise their links to Yahoo! here, as well as to other services they use the most from news to social networks to email to movies. While there are over 60 of these applications at the moment, consumers can add their own by typing in web addresses.

The BBC articles reports that Yahoo! has described the overhaul as the most "radical" and "fundamental" make-over of the site since it began more than a decade ago. Changes to its front page were announced back in October 2007 and the company began testing with users around a year ago. Yahoo's front page is seen as vital to the company's future and is regarded as prime real estate because it serves as an entry point for users, and as a result commands premium advertisement prices.

Labels: yahoo

The Wall Street Journal reports that Yahoo! is due to launch its Search Pad tool in the coming week. This is a new search feature the company has been developing which aims to help users store and organize their search results, including the ability to save results and take notes on web listings they want to revisit — much the same as Google's personalised search function.

Search Pad is designed to detect when users might be conducting research-related searches based on patterns in their search queries, such as sequential searches for holiday or weather related terms. It then asks the use if they want to start saving the results, and if so, saves the links a user clicks on a separate screen where they can also jot down relevant notes. Users who are then logged in can access their links and notes another time or share them with friends.

Although this is an interesting development for Yahoo! it may come too late, following Google's system and the recent interest in Microsoft's Bing search engine, although it does help to raise the awareness and interest in personalised search tools. However, with more rumours about a tie-up with Microsoft as well, Yahoo! could see this tool get overtaken by events.

Labels: yahoo

Advertising Age reports on the new self-serve advertising product launched by Yahoo!. Called 'My Display Ads', this tool is intended to make it easier for local advertisers and existing search advertisers to try more display advertising on the web. This sort of tool is already provided by Google and Facebook, but Yahoo! has the advantage of a large display advertising inventory which it now wants to develop, including linking search advertisers with the benefits of running display ads at the same time to improve conversions.

Advertisers can choose pre-designed creative layouts from more than 800 display ad templates, or they can make their own by using the simple management tool or by uploading new designs. Ads can then be purchased on a cost-per-thousand impression basis or as part of a cost-per-click auction.

Labels: internet advertising, yahoo

Both Google and Yahoo! have recently published their quarterly financial results, with some contrasting fortunes as the economy starts to have an impact on the search business.

Google released their results last week which were widely reported in the media - including by Information Week - and they were slightly better than analysts expected. Revenue for the first-quarter of 2009 was US$5.51 billion, up 6% year-on-year but 3% down on the last quarter of 2008. Their earnings-per-share figure was also better than anticipated ($4.93) which indicated that cost controls are working and the company is coping with the downturn so far.

Yahoo!'s quarterly results met the expectations of the market and the company said that economic conditions remained challenging, as revenue from advertising on Yahoo! websites and its partner websites declined during the first quarter of 2009. In the first quarter of 2009, Yahoo! generated revenue of US$1.58 billion, down 13% from the same period in 2008, with a net profit of US$118 million, down from US$537 million a year earlier. As reported by Reuters, Yahoo! also said it would cut 5% of its global workforce, following the earlier cuts announced in 2008.

Labels: google, search business, yahoo

As widely reported in the press, Yahoo! and Microsoft have started talks again over a possible search engine partnership, less than a year after Microsoft failed in a $US44 billion takeover attempt of Yahoo! At this stage there is no suggestion that a takeover bid is on the cards again, but the two companies are believed to be discussing ways they can link up their resources to combat the ever increasing market share of Google.

More information and possible outcomes from these talks will no doubt follow and there remains plenty of life left in this story.

Labels: microsoft, search business, yahoo

The New York Times covers the trial that Yahoo! is currently running with a new form of PPC advert, which integrates images and video. This is something Google already offers, but only for selected advertising with their third-party content network, whereas Yahoo!'s new test is targeting their main PPC channel on the Yahoo! search network.

Called Rich Ads in Search, Yahoo! is hoping that the higher profile and better clickthrough rates shown from the initial tests will attract more advertisers to use this format of advertising, and will also drive more clicks and therefore revenue from their search results.

Although Yahoo!’s traditional strength has been in display advertising, as the current economic recession has deepened in the US, many advertisers have shifted money to search, which gives them direct, measurable results. Yahoo!’s recent fourth-quarter results have reflected this trend, with search revenue showing an 11% growth and display revenue falling by 2%.

The article reports that Yahoo! has been testing these new adverts in a number of formats, with dog-food company Pedigree displaying a small video for a commercial when a user searches for the company name. The video opens up into a larger format and plays once clicked. Similarly, a search for Staples displays in a similar light-blue box with the company’s logo on the side, which is also a link to the corporate site. Alternatively, retailers can include a search box within the advert panel to enable searchers to enter a ZIP code, which will then take them to the advertiser’s website that lists the nearest stores or branches nearby.

Yahoo! is currently charging a monthly fee for the service, compared to the traditional auction-based pricing of search advertising. It is reportedly only allowing only a selected number of large, brand-focused advertisers to test the program. According to Yahoo!, some advertisers in the pilot program saw an improvement by as much as 25% in click-through rates, although an independent agency reported lower results, around 5-10% higher than the regular text adverts.

Yahoo! clearly hopes that this new type of search advertising will prove attractive to companies who pay high prices to develop their commercials and logos and want to be able to show those wherever they can. It may prove an important development for Yahoo!'s search performance as the company remains under pressure from financial analysts to consider selling its search business to Microsoft, who continue to express an interest in such a deal to grow their share of the search market.

Labels: online advertising, ppc, yahoo

The New York Times reports on a move by the 3 main search engines - Google, Yahoo and Microsoft - to clean up the amount of 'clutter' on the web by creating a new web standard that will allow website publishers to remove duplicate pages from their sites. This should allow the search engines to remove lots of duplicated or 'dead' pages from their indexes to make them more efficient and potentially more comprehensive.

This cooperation between the search engines follows the previous standards developed for the sitemap protocol and this time targets those large dynamic websites (such as e-commerce stores) that generate multiple URLs that all point to the same page. This effect can confuse the search engine 'spiders' that are trawling the web and lead to the indexing of the same pages multiple times. Some estimates claim that as much as 20% of URLs on the web may be duplicates, although this is possibly on the high side.

Google has lead the way with this move, providing website owners the chance to indicate when a URL is a duplicate, and if so, which is the principal, or “canonical,” URL that search engines should be indexing. Yahoo and Microsoft have agreed to support the same standard. This new Canonical Link Tag, as the standard is known, should make it easier for both publishers and search engines to address the problem, but of course the most important thing is to make web publishers aware of this and to give them the incentive to add the tag to their pages.

Labels: google, microsoft, webmaster tools, yahoo

The recent decision by Yahoo! founder and CEO Jerry Yang to step down from the position has lead to much speculation about who might now replace him and what options are open to Yahoo! in the future. Advertising Age has published a good summary of the potential candidates for the job and the task that awaits them.

Yahoo! has had a tough year - repelling the advances of Microsoft, attempting a closer advertising deal with Google which hasn't paid off, and facing a declining market share and growing business pressures against its main rivals. The decision on who will lead the company into 2009 and to potentially turn the business around into a more effective market competitor will be an immensely important one. The outcome will determine whether Yahoo! survives in any meaningful way over the next 12 months.

Labels: search business, yahoo

Following the announcement back in June that Google was to provide search advertising through Yahoo!'s content network, the deal has been facing government review for anti-competitive concerns. After some delay and increasingly negative feedback from the regulators, as well as from some advertisers, Google has finally decided to step back from the deal and has announced an end to the agreement.

The origins of this arrangement followed Yahoo!'s aborted takeover by Microsoft and came at a time when Yahoo! was looking for support against this move. Now, however, Yahoo! is looking increasingly isolated as Microsoft are saying they are no longer interested in a deal except possibly a more limited search partnership Yahoo!'s stock has also fallen lower than when the takeover was in discussion and they look to be in an increasingly fragile position.

Labels: google, search business, yahoo

The Microsoft / Yahoo! saga continues with a new approach by Microsoft to buy Yahoo!'s search business. As reported by The New York Times, the new offer marks a formal alliance between Microsoft and Carl Icahn, the billionaire investor who has been trying to oust Yahoo!'s board and creating an increasingly hostile and aggressive approach to achieve his - and Microsoft's - desired outcome.

Yahoo! quickly rejected the new offer and the board, who are defending their own positions, appealed to shareholders to reject the approach as a bad move for Yahoo! This latest move is likely to reach a showdown at the annual shareholder meeting at the start of August. Yahoo’s board apparently indicated to Microsoft on Saturday that it was willing to sell the whole company at $33 a share, which was the price first offered by Microsoft back in May, which Yahoo had rejected.

More details about the latest negotiations are included in the article and this story is bound to generate much more coverage and comment until such point as a definite outcome is achieved.

Labels: microsoft, search business, yahoo

After much speculation, Yahoo! has now agreed a deal with Google to carry their search advertising in return for a revenue share. As reported by many news agencies, including Reuters, the deal forms a non-exclusive partnership and Yahoo! say they have made this move after failing to agree a deal with Microsoft who had revised their earlier acquisition approach to now buy just Yahoo!'s search business.

Under the new arrangement with Google (which follows an earlier trial period), Yahoo! will run Google's AdSense PPC adverts alongside its own search results and on some of its websites, but only in the United States and Canada for the time being. Yahoo! will also retain control over where the Google ads will run and which search terms will be used - there is more information published by Google on their official blog. The deal has been agreed to initially cover four years, with options to renew it up to a period of 10 years.

Yahoo! must see this as part of a rescue plan for its ailing business since it expects the deal to create an additional $250 million to $450 million operating cash flow within the first year. However, within the brief press release there is no mention of what impact this arrangement will have with Yahoo!'s own PPC service and for the advertisers currently running accounts in these regions, but it seems to indicate that Yahoo! expect to make more from this model than developing their own service. More on this should become clearer over the next few weeks or months.

Labels: google, ppc, yahoo

Not surprisingly, the Microsoft - Yahoo! story is unlikely to go away for some time and there are still possible discussions and initiatives to be developed by either party to get to their ultimate objective. As widely reported, including by The Sydney Morning Herald, Microsoft are apparently talking to Yahoo! again about some form of joint partnership, partly to keep the door open to an eventual takeover but also to block any moves that Google may be trying to fill the space of the abandoned acquisition attempt.

Yahoo! is also having to keep an eye on a potential proxy fight from shareholders, led my billionaire investor Carl Icahn who has criticised the Yahoo! board for their handling of the Microsoft offer. The rumours are that Microsoft are discussion some form of joint advertising arrangement with Yahoo!, based on search advertising or targeted display advertising, to try to ward off a stronger partnership being formed between Yahoo! and Google.

There's almost an inevitability that the 3 main players within the search market will merge in some format eventually -and most likely a Microsoft-Yahoo! deal - which will not be good news for the overall market and advertisers, but probably a natural progression for the runners-up to try to tackle Google's strengthening monopoly.

Labels: microsoft, search business, yahoo

The New York Times reports that Google executives have expressed a desire to develop the advertising relationship with Yahoo! that was tested for several weeks recently with AdWords appearing alongside Yahoo!'s search results. This is partly a move to ward off any possible future attempts by Microsoft to make a bid for Yahoo! but could also be a lucrative development for both Google and Yahoo!

Any arrangement, should it go ahead, would face antitrust investigation in the US due to the dominance of the search advertising market by the two companies. It would also have serious implications for Yahoo!'s own PPC advertising system, which is still struggling to compete against Google, despite a facelift and relaunch in recent years. Such a move would also place even more power within Google's control and advertisers would have even fewer options to place search advertising so that bid rates would continue to rise.

Labels: google, ppc, yahoo

The ongoing saga of Microsoft's attempts to buy Yahoo! came to an abrupt halt on Saturday when a top level meetings between the executives of both companies failed to reach an agreement. Despite Microsoft upping their bid price to nearly US$50bn, Yahoo! still held out their position that the bid was undervaluing the business and so Microsoft finally withdrew their offer.

Shares in Yahoo! fell as news of this development reached the markets, and the question now remains - what will Yahoo! do now? Will they continue to pursue the other business alignments that were being investigated during the takeover offer period, such as with AOL, or try to build on the recent advertising trial with Google?

It's no doubt good news for the web search market that Microsoft hasn't pursued this acquisition to a successful conclusion, but it now leaves Yahoo! in a weaker position from which they need to develop their business and services to help them maintain their position in the market, and to protect themselves from other predatory takeover attempts. Microsoft are also likely to be reviewing the outcome and deciding where to spend their cash now and it may eventually come about that another purchase attempt will be made if Yahoo!'s value takes another hit in the future.

Labels: microsoft, search business, yahoo