A marriage of convenience...for consumers
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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.
Any marriage between the two companies was thought to be a long-lost dream until last month’s Cannes International Advertising Festival, when Microsoft chief executive Steve Ballmer admitted he was still interested in a deal with Yahoo!, as reported first by Marketing Week.
At the time, he said: “A partnership between the two companies makes sense in order for us to provide a better product based on advertiser interactions.”
And now, after many negotiations behind the scenes, it looks like this is close to becoming a reality with Microsoft’s Bing search engine set to power the Yahoo! website and Microsoft taking ownership of Yahoo!’s search technology.
With digital marketing now a mainstream discipline, advertisers have been waiting for this opportunity to experiment and as one corporate FMCG marketer, put it to me: “Being with the world’s leading PC specialist combined with the world’s most popular online destination will make the Bing experience that much more interesting to us and will make the media buying that much more affordable too.”
Don’t get me wrong, I don’t think for one second that this will be the solution that will topple Google from its prime position. Not even Ballmer or Yahoo! chief executive, Carol Bartz thinks that. Taking a much more pragmatic approach, the two companies say they want to be a “strong number two competitor in the market, creating a credible alternative for advertisers.”
Sceptics will say this is unachievable. I disagree. Microsoft is actively pushing Bing on all its online properties and its beta run has seen a 20% increase in people using its service. It has the added benefit of being on the homepage of new installs of Internet Explorer and the default search engine on the aforementioned browser.
Yahoo! also has its search engine facility on the box and research has shown that people who rely on the web service use it as their main search source. Its latest home page revamp sees it bid to keep its leading online destination status and help orient search using its engine, instead of going to another page.
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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Readers' comments (8)
Anonymous | Thu, 30 Jul 2009 7:13 pm
Dont forget people,
Some marriage of convenience do end in divorce.
This news is disappointing - same old story."we all been there done itnothing new".
What would have been interesting to hear, is for both MSN and Yahoo global brands - who are both trying to get a leg over Google is to try something completely .
By announcing an innovative technology concept to launch web 3.0/web 4.0 to replace Google's current concept.
Cant' both MSN and Yahoo brands come up with an innovative CONCEPT to rival Google now ?
Frankly we are all bored with the current concept. Again the focus for both brands is to gain market share from Google...more profits.
On the plus side,it will be nice for both brands to leave a legacy behind for the next generation - as part of the remit.
After all both MSN and Yahoo brands support a global community.I
It is not just a war about gaining Google's market share.
Dont take Google for a ride- they own 65% of the global market share for both search engine and advertising.
Google will remain No.1 for 100 years to come and gain further market search-by 2010 market share for Google will be 70% with further increment by 2012. They are ahead of their competitors.
Nice try MSN and Yahoo,
Where is the honeymoon location? Lapland ?
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Anonymous | Fri, 31 Jul 2009 10:18 am
“Finally Yahoo! and Microsoft have decided to join forces no doubt hoping the synergy they create will be enough to take on Google in both natural search and through their online advertising platforms. By trading search engine technology (Bing to Yahoo!) and advertising platform (Yahoo! to Bing) the plan would be to have an offering that will utilise the best of both companies and create a viable alternative to Google. Whether either one of these properties is good enough to challenge Google is a moot point, and has been for the last 5 years. So whether the new entities will actually eat into Google’s share significantly is doubtful, at least in the short term.
What worries me is the fact that we are now down to effectively two main search engines. Who knows, maybe Ask will step up here but I am not convinced. But I hope they do! It was interesting to see that new Chief Executive Carol Bartz, who some see as vital to getting this deal done. has pulled this off in a relatively short space of time. Bartz then went on to made a predictable rally call of “This agreement comes with boatloads of value for Yahoo, our users, and the industry. And I believe it establishes the foundation for a new era of internet innovation and development”.
Fine, lets see it and see it soon. As impressed as I have been with Bing its been a long time coming so just how quickly will they join forces and we start to see real changes for the better remains to be seen. Still, good luck to them in this 10 year deal which may be more centred around costs savings than innovation. And who knows, maybe the antitrust regulators will have the last say and block the deal? Where then for them and us?”
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Anonymous | Fri, 31 Jul 2009 11:35 am
It’s been 18 months since the rumour mill first started touting the possibility of a deal involving Yahoo and Microsoft, and the industry as a whole will be delighted to see what’s become the search business’ longest-running soap opera finally approaching a conclusion. The devil will be in the detail, but given the alarming dominance that Google has held over the market for so long, the prospect of a serious challenge to their position is good news for everyone.
Although the impact in the UK will be minimal, with the combined entity still only accounting for a market share of around 5%, competition in any market is good for consumers. If the partnership succeeds in growing their market share still further, the renewed challenge could force Google to become more competitive.
With the precise details of the agreement still a closely guarded secret, the news that Yahoo has finally succumbed to Microsoft’s advances has spawned widespread speculation over the deal’s possible ramifications. While the prospect of a serious competitor to Google’s Adwords system is being touted as a move that could help push PPC advertising prices downwards, other commentators have suggested that the deal could force the search giant to reconsider its policy against paying commission to partner agencies.
There are still more questions than there are answers about this deal, but If Yahoo’s paid search ads are powered by Bing then we will have another credible search engine to consider for paid search budgets. That may result in some instability as bid management platforms adapt to cope with the new landscape, but it will help keep cost-per-click prices down.
But if Bing is only going to supply Yahoo with organic results then it still means Yahoo is out of the search game. They’ll not be developing their search engine, are unlikely to return to it and will in essence become an ad management platform - the long term effects of which remain to be seen.
Lyndsay Menzies, Chief Operations Officer and Andrew Girdwood, Head of Search at bigmouthmedia
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Anonymous | Mon, 3 Aug 2009 4:32 pm
They say: For Web users and advertisers, this deal will accelerate the pace and breadth of innovation by combining both companies’ complementary strengths and search platforms into a market competitor with the scale to fuel sustained development in search and search advertising. Users will find what they care about faster and with more personal relevance. Microsoft’s competitive search platforms will lead to more value for advertisers, better results for Web publishers, and increased innovation and efficiency across the Internet.
They could well be right - but such advances will require a fundamental shift in the change of thinking by consumers and advertisers. As I type this, I look at my address bar and I see a Google toolbar. Now the problem is, where am I going to type in my search query - into Bing, which is in amongst a lot of interesting content but no so easily visible or into Google toolbar which I know where it is all the time and I know it will take me to the results page easily and quickly.
I'd love to know how they were going to crack this. After all MSN and Yahoo! are both great content and display pages, but seldomly used purely for search - whilst Google is the reverse.
Having said that, aspirations to be second in the marketplace are not wide off the mark and advertisers will seek to try out this technology as a cheaper viable alternative. Metrics must come up positive for it to succeed, which will require a much more deep and insightful marketing campaign - pulling Bing out of Beta asap.
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James Khan | Mon, 3 Aug 2009 10:51 pm
An interesting opinion piece and bravo to Marketing Week for keeping with the story since Cannes.
Joe hints at an interesting point here. Microsoft has all the luck in being able to use Yahoo!'s expertise immediately. Yahoo! on the other hand must wait for any cash benefits to be seen, despite being founders in search.
In my opinion, the deal couldn't have happened at a better time. Budgets are tighter, more brands are looking online and believe it or not, search engines are an advertising haven with the auction systems being hot property for advertisers now.
If an agreement to run Bing sales much more cheaply and with an advanced auction system that gives every advertiser a fair go, it could well attract more agencies and brands to give it a try.
Indeed, the FMCG marketer cited above demonstrates the potential beliefs around two internet giants merging like this to the naive ear who likes the sound of two big companies for the price of one.
Having read the website for the two however, I'm not so convinced... nothing shouts out at me to say we can overthrow Google and be better for you
Team Bing, you have a lot of work to do yet!!
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thomas winterbourne | Mon, 3 Aug 2009 10:56 pm
Don't forget Google has an ad exchange to focus on launching OK right now... Microsoft already leads online display ads, as Joe says above... so a bit of competition will probabaly mean more banter between the pair, without, of course, issuing any sort of forward-looking statements!
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Nigel Whooly | Tue, 4 Aug 2009 11:21 pm
Yes, search continues to grab attention and yes, search is showing itself to be a place where people click for results, but at the end of the day memory serves best through engagement and persona - simple text cannot offer this.
I have no doubt Bing can become a viable second choice to Google. Microsoft and Yahoo! are both committed to making research a key priority area for revenue growth - not a bad choice, when we see Google continuing to keep in the black, whilst rivals suffer. As an advertiser, I know clients will ask me to save money and try Bing and pending any disruptions to this going ahead, I've no doubt the advertising industry will embrace it.
But, and it's a big but, without credible metrics and analytics... without that vital proof of ROI, Bing will just be yet another bow to their respective display businesses - which against all odds, have retained their independence.
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MICHAEL LIEDTKE | Fri, 7 Aug 2009 4:14 pm
If you run PPC (pay per click) campaigns, the main question may be whether ‘BingHoo’ traffic is going to convert to extra clicks and whether it is worth your time administering two campaigns across separate platforms. The problem is weak traffic volumes and challenges associated with optimising separate accounts, if you are anything other than a big PPC spender, you end up with a neutral to negative case for marketing spend on Bing.
The bottom line is 8% volume may not be enough for the majority of UK advertisers to shift their efforts exclusively from Google PPC, even with easier campaign management.
Microsoft hopes to use Yahoo to divert sales from Google, which generates more than $20 billion a year from ads - hmmm Good luck with that Ballmer & Bartz!
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