Agencies question Google/Yahoo! tie-up

Google ads will soon appear on Yahoo!’s search engine results in the US†and Canada, in a pact that is anticipated to roll out globally. But industry experts are already questioning what impact will will have on UK advertisers’ online campaigns.

Lyndsay Menzies, managing director of Bigmouthmedia UK, says while details around the service are yet to be revealed a critical issue will be whether clients will be able to see which of the two search engines is driving the traffic in its AdWords reports.†

“The ability to identify the origin of such traffic is crucial, and we are already in discussions with Google that we hope will produce and answer to this question at the earliest opportunity,” she says.†

Gavin Syndon, Equi=media digital strategy director says at this stage it is taking a wait and see approach, but what he would not want to see is a reduction in choice and a reduction of data. “Our view of online advertising world is that it’s marriage of content and data. We place our clients around the right and suitable content and we can accurately judge what that advertising produces. When that is eroded then it could become an issue,” Syndon says.†

Oliver Bishop, chief executive of digital agency Steak, says Yahoo! may be tempted to put increasingly more Google ads on its service, which would lead to higher rates for advertisers. He also questions whether Yahoo1’s traffic converts as well as Google, adding that that would be key to weather advertisers would sustain the higher bid prices on Yahoo!†

In the US, some analysts have been quick to critise the Yahoo! and Google alliance, with Jeetil Patel from Deutsche Bank calling it “one of the worst strategic manoeuvres seen in the internet industry”, which effectively signals the end of Yahoo!’s competitive entry in the paid search sector. It also signals to advertisers and their agencies to simply go straight to Google to purchase ad impressions from Yahoo! in the longer term, he adds.†

The agreement is not expected to come into play until September and Google refuses to be drawn on when and if it will be rolled out to other markets. But industry observers are already tipping that if it is successful in the US a further roll out is inevitable.†

Google and Yahoo! have already been fast to quash any claims that the move is anti-competitive, although US commentators are also suggesting that Microsoft will begin to lobby against the deal in Washington.†

The deal comes in the wake of a break down of merger negotiations between Microsoft and Yahoo! Microsoft made its approach public in January and on Sunday said it was no longer interested in buying the company outright even at its last suggested price of $33 per share, around $47.5bn (£23.5bn). It suggested instead a proposal to buy just its online search operations.