By David Gould, President
Below is an abbreviated version of the POV that was sent to all of our clients and partners yesterday. If you are a client or partner and did not receive it please contact your Resolution Media account representative.
Last year, Microsoft announced a voluntary $47.5 billion takeover bid of Yahoo! in hopes of securing Yahoo!’s massive search traffic in order to compete with Google. Since last year’s failed attempt, Microsoft has continued to show interest in Yahoo’s search business and Tuesday, they were finally able to strike a deal. The search agreement is designed to allow the two companies to combine search share, save on sales and technology and ultimately, deliver a more competitive solution to meet the needs of consumers and advertisers.
Terms of the Deal
While Yahoo! and Microsoft have announced many details of the recent search deal, it has yet to undergo regulatory evaluation and is expected to close in early 2010. Microsoft representatives say that the deal won’t be making an impact for at least 18 months. As it stands, the deal has the following terms:
- The term of the agreement is 10 years
- Microsoft’s Bing will be the exclusive search platform (search engine) for Yahoo! sites
- Microsoft will acquire an exclusive 10 year license to Yahoo!'s core search technologies
- Yahoo! will become the exclusive sales force for both companies' search advertisers
- Microsoft's AdCenter platform will be used by advertisers to manage their paid search campaigns on Bing
- Prices for all search ads will be set by AdCenter's automated auction process
- Each company will maintain its own display advertising business and sales force
- Yahoo! will innovate and "own" the user experience on Yahoo! properties, including the user experience for search, even though it will be powered by Microsoft technology
- Microsoft will compensate Yahoo! through a revenue sharing agreement at a rate of 88% on traffic generated by Yahoo!'s network
- Launch is expected to occur within 24 months of final regulatory approval
- The agreement protects consumer privacy by limiting the data and uses of data shared between the companies
Impact on the Advertiser
- Better data and engineering to lead to better technology and performance
- Potentially an increase in CPCs on the adCenter platform as advertisers embrace a more-approachable Google-alternative
- Potentially improved performance as the companies combine their ad platforms into a best-of-breed to maximize searcher experience and advertiser value
- Better sales support through consolidation and long-term focus
Impact on the Agency
- New efficiencies in managing large and complex search campaigns
- Some challenges with adCenter’s integration with major campaign management tools
- Easier tracking and reporting but added work for proprietary technology tools
- Better communication and sales support
- A little bit of a learning curve with Bing, especially on the SEO side
Impact on the Searcher
For the most part, searchers should be cheering Tuesday’s announcement. More searchers will benefit from Bing’s seemingly-superior search results, even inside the comfort of their content-heavy homepages. Ads and search results should become more relevant over time as Microsoft and Yahoo! are able to put their heads together around data and relevancy. Die-hard Yahoo! searchers may be disappointed to lose their favorite search engine but in the long-term they should have access to more relevant results while still choosing a Google-alternative.
Microsoft’s online and offline promotion of Bing over the next 6-12 months will likely contribute to an increased share of overall Internet searches. But even with a considerable increase in share in coming months and an agreement with Yahoo!, Google will likely continue to have a majority hold on search market share. As always, Resolution Media will continue to monitor the deal as it develops and keep you informed of developments as they arise and impact your campaigns.
Official press release
Wall Street Journal coverage
New York Times coverage