A marriage of convenience…for consumers

OPINION: So Yahoo! and Microsoft have tied the knot at last; well, in a manner of speaking at least. It’s taken 18 months for their partnership to come to a conclusion, but search marketing looks like it might finally become that little bit more competitive.


Both are also hugely popular with users for their web mail services – Hotmail and Yahoo! mail – more so than Google Mail, offering yet another opportunity to get people using Bing.

What remains a challenge for the partnership is being able to prove the metrics that consumers are clicking on the adverts. However, the soft launch of Bing has seen an increase in demonstrating this and the joined-up forces aimed at developing the technology can only boost this further. Microsoft and Yahoo! promise value, choice and innovation and have even developed a website, Choice Value Innovation, www.choicevalueinnovation.com, to really promote the opportunity.

As Microsoft’s managing director and vice president of consumer and online, Ashley Highfield, explained to me: “It’s no secret that Microsoft has found search a challenge, but the advances of Bing continue to get better and better, and is beginning to become a much more intriguing opportunity for advertisers. This innovation is getting better and better and we have high hopes for its success.”

Of course, the real winners here are Yahoo! Microsoft is already a hugely successful company in online display advertising, even working with the like of Facebook. Search has always appeared as a hobby, with previous incarnations like MSN Search and Windows Live Search falling by the wayside.

Yahoo!, on the other hand, has suffered in recent times. Its search has remained in second place, but Yahoo! has seen its revenues continue to plummet. Last week, it said revenues for the quarter to June 30 fell 13% to $1.57bn (£953m), blaming the challenging economic environment.

Analysts tell me that the merger is “literally saving their bacon”. I couldn’t agree more. Once renowned for its yodelling ad by consumers, buzz around the company has faded and advertisers have lost interest in its search offerings, though its growing publisher network continues to garner interest.

It was hoped that last summer’s proposed tie-up with Google in the US would reduce some of the damage, only for it to be blocked by the American courts. The failed Microsoft takeover further dented its reputation, ultimately forcing CEO Jerry Yang out of the hotseat.

At least now, pending any anti-trust concerns that may arise, Yahoo! has ten years to start afresh. The terms – keeping 88% of the revenue from all search ad sales on its site for the first five years of the deal and the right to sell adverts on some Microsoft sites – seem to be in its favour too. Given its completing marketing overhaul recently, Yahoo! is in prime position to really make the most of these new opportunities to advertisers. And most importantly, no money has been paid out, limiting any damage should anything go wrong.

Microsoft has already promised a UK Bing campaign when the technology is ready to come out of Beta. If I was a betting man, I would say this would be sooner rather than later – witness the success of its US marketing, rumoured to have had a $100m (£60m) budget. I’ve used it a few times now and it’s good enough for me – and I say that as an ordinary consumer, not a digital marketing journalist.

Yahoo!’s UK managing director, Mark Rabe, tells me: “As the internet continues to open up to users and developers, more opportunities for search marketers are created to help them mould their marketing programmes, yet at the same time the content explosion poses specific challenges for marketers as they seek brand engagement. Content and interaction will only continue to grow, forcing marketers to rely on search marketing initiatives that are focused and tailored to grasp consumers’ attention.”

For me, it’s not just the new enlarged Bing that will be interesting, but the competition between MSN and Yahoo! on content too… the next ten years will be fascinating to watch, and if Ballmer’s right, we’ll all be digesting it online by then too.

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