Microsoft and Yahoo warned client service is key to beating Google

Microsoft and Yahoo will fail in their joint bid to win market share from Google unless client service levels match the standard set by the runaway sector leader, according to UK search specialists.

While last week’s proposed ten-year search agreement between the two internet giants has been seen as a landmark deal, bringing greater competition to the sector, industry experts have warned that Microsoft and Yahoo remain far behind Google in terms of customer service, campaign analysis and insight.

The deal, announced last Wednesday by Yahoo CEO Carol Bartz and her Microsoft counterpart Steve Ballmer, will see Yahoo sell search ads under Microsoft’s fledgling Bing brand ( 29 July 2009). Yahoo estimates the deal will bring in an extra $500m (£300m) in search revenues.

Rich Riley, head of Yahoo Europe, told new media age the deal will also provide advertisers and agencies with greater insight into campaign management, with client feedback a priority.

“Advertisers currently don’t have a lot of choice or flexibility when buying search in Europe. We’re offering a great alternative, real choice, massive scale, higher quality at a more competitive price, more effective ways to run ad campaigns and improved relevance.”

Speculation has so far focused on the market share both companies have gained through the deal, but UK sector specialists are urging them to step up their client services if they’re to gain significant ground on Google.

Mark Mitchell, group head of search at media agency OMD UK, said Google is considerably further ahead in providing insights into how clients can spend more effectively. “The key challenge they face is Google’s customer service. The resources it provides right down the chain are well ahead of the others,” he said.

Andrew Girdwood, head of search at Bigmouthmedia, said Yahoo’s role in selling advertising rather than Microsoft is perhaps the wrong way round. “More recently it has been Microsoft’s sales team that has provided clients with greater insight through its AdCenter platform than Yahoo has with Panama,” he said.

Ben Wood, MD at media agency Diffiniti, said there’s confusion about how much information will be shared between Yahoo and Microsoft, especially as both Bartz and Ballmer have insisted they will remain direct competitors in display advertising.

“Both companies, along with Google, have been looking at the integrated effect search has on advertising, but it’s hard to see how this will evolve if display remains separate,” Wood said. “It’s a shame it appears Yahoo is giving up on search.”

Despite increasing speculation that Yahoo has done badly out of the deal, Ian Maude, an analyst at Enders, said the internet giant should be pleased with the outcome. “There’s an argument that Yahoo gets the better end of this deal, as it gets out of search – a battle it hasn’t been winning – but retains the client relationships and a large proportion of the revenues, for now, while Microsoft takes on the cost,” he said.

Both Bartz and Ballmer are confident the search deal will be approved by regulatory parties in North America and Europe, despite a similar deal between Google and Yahoo collapsing last November following pressure from anti-trust investigators and Microsoft itself.

Subject to final approval, transition from Yahoo’s Panama platform to Microsoft AdCenter is expected to take place over 12 months from early next year, with full global transition for all search services done by 2012.

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