Is microsoft about to revive the rumours and constant wondering about Facebook buyouts?  After every billionaire tycoon and his dog were linked with buying the social media phenomenon it has all been quiet for a while.  Now apparently it has come out that Microsoft has put the feelers out about a purchase of the social network.  Full article from search engine watch below:

About Face(book): Microsoft Feels Out Social Network Acquisition

Though Bill Gates was out there telling people Microsoft is not interested in making non-Yahoo acquisitions right now (at least in the search/social world), word comes that Microsoft bankers have sent “feelers” to Facebook about a full acquisition.

Here’s why this is a solid move:

1. Microsoft already owns 1.6% stake in Facebook, worth $240 million
2. Microsoft formed a data portability partnership with Facebook and 4 other networks
3. At least two Google execs have jumped ship to Facebook in recent months

While Facebook has yet to “overtake” MySpace in the social media market, it is a viable competitor. And I’m sure Ballmer would love for Microsoft to own a social network that even Apple has used as a marketing ploy as of late. Recent commercials for the iPhone entice potential customers through the ability to access Facebook on the popular mobile device.

Additionally, internet users are turning to their social networks during their search process. Consumers want answers and reviews and social networks help them get opinions from trusted sources.

The Facebook move would likely be seen by many as a better fit than Yahoo. But expect just as many to see it as a negotiating ploy in their bid for Yahoo. Though Microsoft has officially withdrawn its bid for Yahoo, many analysts expect Ballmer and the team to return to the table for another stab at a grab for the search engine.

Slightly old news as it was announced 14 days ago but Ive been a little busy so am finally getting round to posting about it.

Yahoo! has purchased web analytics software solution Indextools for an undisclosed fee.  The tool which one commentator described as”one of the best kept secrets in the industry” has been bought as a direct response to Google Analytics, this is easily shown by the fact that the first thing Yahoo! have done, is make it free! (remind you of any other analytics package?).  Yahoo! has had its own tracking solution for a while but lets face it, it was pretty rubbish.  So this purchase and the immediate action of making it free of charge puts Yahoo! firmly in competition with Google in the combined search, analytics market it in my eyes, gives them an advantage.  I have used Indextools for a number of years and can honestly say it is 100x the package that Google analytics is.  This is a full on, analytics, campaign management, usability, all singing, all dancing tool, which when used correctly can do some pretty impressive things.  Realistically most people wont use all the best bits of Indextools but the savvy internet marketeer could actually get for free with Indextools, what would have cost them £500-£1000 a month in the past, bargain!

I am intrigued as to what Yahoo!’s plans are for Indextools as if they are to continue to offer it for free then are they going to remove some functionality to strip down the software functionality?  I hope not but it probably makes more business sense.  Maybe then offer the additional functionality at a cost, but does that go against what Yahoo! are trying to achieve?

In order to qualify for the package at no cost existing customers are required to sign a new Yahoo! agreement.  I haven’t seen this agreement yet but it will be an interesting read (if such documents can actually be interesting!) as one of the concerns around using Google analytics, and now Yahoo! owned Indextools is the data you are passing to the search engines about your campaigns.  Who owns this information and how can it be used is key in determining whether by selling out to Yahoo! Indextools is likely to lose all its clients.  It may seem a little big brotheresq but would you really want Yahoo! knowing the details of all your online activity?  not just search (and therefore Google) but also you display, affiliate and email campaigns?  because that is what Indextools is best at, compiling data into a logical dashboard enabling you to see all your data in one place.  If Yahoo! is then going to use this data to make competitive decisions then nobody is likely to want to use Indextools anymore.  I suppose we will just have to wait to see the contents of this agreement and its approach to data usage, but I just hope by buying one of the best, most usable tools on the market, Yahoo! hasn’t inadvertently killed it.

It seems like Yahoo! may have finally given up trying to beat Google with the announcement that they are running a two week trial displaying Google AdSense listings alongside their search results in the US (more detail).  The initial trial will include the results displaying on no more than 3% of search queries submitted and will only be seen by Yahoo! US users.  Yahoo! claim the move is is part of an “exploration of strategic alternatives to maximise stockholder value”, i.e. make them more money.  Microsoft have already expressed their own concerns that should a future deal be struck this would take Google past the 90% market share mark and raise further competition concerns.

It concerns me what a future deal could mean for the search market as the it effectively means a consolidation of the market as opposed to the fragmentation we had seen coming over the past 2 years.  This simplifies the process and doesn’t necessarily bode too well for search marketing agencies.  From Yahoo’s perspective it may come down to purely monetary figures.  If they have decided that they are not going to get very far with challenging Google in the paid search market then displaying AdSense results would allow them to significantly reduce their staffing levels and technology costs.  Although it wont be nice for those people that end up getting the boot, the boardroom wont be concerned if the figures stack up.

It does make you wonder what sort of deal has been brokered for the trial and the possibilities beyond though.  A typical AdSense partner might be earning 40% of the click revenue generated but Yahoo! aren’t you standard partner! Could Google be willing to let Yahoo! keep all of the revenue for the sake of market share?

Brekaing news from nma.co.uk! 

Google has completed its acquisition of ad-serving company DoubleClick, following the green light from the EU.At a reported £1.6bn ($3.1bn), the cash deal is Google’s biggest acquisition to date.

It looks like Microsoft might be refusing to take no for an answer in their bid to buy out Yahoo! in a bid worth $40Bn.  After having their bid rejecting because the Yahoo! board believed it significantly undervalued their brand and investment in technology Microsoft are rumoured to be responding by attempting to ignite a proxy fight to take over the company.  Such a proxy fight would see Microsoft nominate a group of directors sympathetic to a deal for shareholders to vote on at Yahoo’s annual meeting.   According to Morningstar this is Microsoft using the carrot and the stick approach, just both at the same time! The carrot of the share price, 62% above trading price, and the stick which comes in the form of the threat of a proxy battle.  The drama continues and maybe Microsoft will get their way after all!

The saga of who will buy/merge with Yahoo continues with the announcement they are in talks with AOL about a potential merger to take on the digital world.  It is difficult to see how two very similar operations could effectively pull together to take on the market as is pointed out by Mashable.  They are both a web portal offering search functionality, display advertising and personal email so what a merger would achieve is slightly confusing unless the both of them are willing to merge their systems for the greater good of taking on Google and Microsoft in their respective strong holds.  The only benefit I could see is if by merging their two media selling/buying operations they could aim to offer the advertiser greater reach through one point of call but this is a tenuous link at best.  Maybe they have something else up their sleeve whcih could surpries us all but for me there is little benefit in such a merger.

Yahoo!’s board have unanimously voted to reject Microsoft’s astronomical bid of $44.6bn (£22.4bn) claiming the offer significantly underalued the company! Rich considering the offer was 61% up on their closing share price from the previous day.  Yahoo!’s explanation is that the bid undervalued the strength of the Yahoo! brand, user base and recenty investment in advertising technology.  My take is that they arent too keen on becoming a Microsoft company and having a consolidated position in the market as they already have a larger share of the lucrative search marketplace and a comparitive stance in other areas of online as well.  I wonder whether this will open the door for a bid from Google as had been rumoured last week or whether Yahoo! would rather continue the fight on their own against the big G.  This probably wont be the last we hear about alliances and a consolidating market but Im not sure any future deals will be on the same scale.

NMA article here

Ive finally gotten round to having a little think about the big news story of the week, Microsoft tabling a bid of $44.6 Billion in cash and stock to buy its rival Yahoo.  There has been no official comment from Yahoo on the reports but I thought Id document my thoughts on the impace this could have.

The portal market

Yahoo and MSN are the two big players in the portal market, the one stop shop for all you web needs, search engine, web mail, news feed, weather reports, all in one place.  This is where Microsoft will gain a massive advantage and pretty much gain complete dominance.  Aside from the ISP sites, which gain their visitors through having a default homepage setting in the ISP setup process, Microsoft will have a dominance in this field comparable to Google’s in the search market (more of that in a minute!).  So what does this mean to MSN? Well instantly they will take on board the lions share of the portal advertising revenues around the world.  Yahoo has built an advertising model which is highly lucrative and brings in a huge amount of revenue each year, utilising the latest behavioural targeting technology to keep online advertising moving forward.  MSN obviously has its own advertising model and ideas on how the market is going to advance but they will automatically boost their ad revenues with the purchase.  It also sets them up well for the predicted rise in online ad spend over the next few years, from $40 billion to $80 billion if you believe the predictions, dominance in a market this size is a mouth watering prospect.

The search market

This is where it gets really interesting.  Microsft has struggled to gain a foothold in the search market since it launched its own PPC model in 2006 and I forecasted in a previous post (Microsoft sets its sights on 40% market share) that a purchase may be on the cards if they were to achieve their targets.  The purchase of Yahoo Search Marketing (YSM), if part of the deal, would possibly take their market share into the double figures in the paid search arena.  Their system is good at present, the quality of their traffic is good, its just the volume they have been missing.  YSM would help boost this and make them a legitimate number 2 in this arena and they undoubtedly have the fire power to make dents in Google’s dominance (see their response here).  It does raise the question, what does this mean to search agencies?  the market which was due to fragment with the launch of wikia search, AOL breaking out in the US, Ask hinting at the same, is now significantly consolidated if this deal does actually go through.  Does this make SEM simpler? Not really but it could be perceived that way, a post for another time I think.

How do they manage it?

This will be interesting, does Yahoo become Microsoft branded?  or is it just another property of the technology giant?  Does it become Microhoo? Yasoft? Mahoo? or does it become Yahoo - a Microsoft company? and more importantly for internet marketers do they keep the two infrastructures separate, the advertising interfaces, the search algorithms, the display advertising models.  This is what will be the key determinant of what this means to the industry and what it means to digital agencies.

Whether the deal goes through remains to be seen, when it goes through is another question yet to be answered. What is undeniable is that it is going to influence the online advertising market significantly, in what way, remains to be seen.

Exciting news in the world of search engine marketing, more thoughts and comments to come when I have the time!

Microsoft offers to buy Yahoo

By Franklin Paul and Tiffany Wu - Reuters

February 01 2008

NEW YORK (Reuters) - Microsoft Corp said on Friday it has offered to buy Yahoo Inc, the popular Web portal, for $44.6 billion in cash and stock, seeking to join forces against Google Inc in what would be the biggest Internet deal since the Time Warner-AOL merger.Microsoft offered to buy Yahoo for $31 per share, a 62 percent premium over Yahoo’s closing stock price on Nasdaq Thursday. Yahoo shares jumped to $30.75 in premarket trading.

Yahoo said the online advertising market is growing rapidly and expected to reach nearly $80 billion by 2010 from over $40 billion in 2007. Yahoo added it is “increasingly dominated by one player,” referring to Web search leader Google.

“We have great respect for Yahoo, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market,” Microsoft Chief Executive Steve Ballmer said in a statement.

Yahoo was not immediately available for comment.

The company has been losing market share to Google and warned earlier this week that it faced “headwinds” in 2008, forecasting revenue below Wall Street estimates.

On Thursday, Yahoo disclosed that nonexecutive Chairman Terry Semel was leaving the board, ending its formal ties with the former chief executive, who is credited with reviving the company and then losing touch.

Semel, replaced as CEO last June, had faced heavy criticism for failing to move faster to meet both rival Google’s challenge in Web search and advertising and, more recently, the rise of social networking sites such as MySpace and Facebook.

U.S. stock futures jumped on the Microsoft news, which offset a disappointing earnings report from Google late Thursday.

Paul Mendelsohn, chief investment strategist at Windham Financial Services, said a deal made sense.

“Yahoo is having a really tough time competing against Google. Whether it’s a good price, I can’t see anybody else who is going to outbid Microsoft,” Mendelsohn said.

Microsoft said it had identified four areas that would generate at least $1 billion in annual synergies for the combined entity.

Tim Smalls, head of U.S. stock trading at brokerage firm Execution LLC, was less enthusiastic about the benefits of a tie-up.

“Shocking! To me, the premium seems exorbitant, for what is a dwindling business. I personally don’t see how the synergies of Microsoft-Yahoo is going to take on Google,” Smalls said.

(Reporting by Franklin Paul and Tiffany Wu; Editing by Lisa Von Ahn/Jeffrey Benkoe)

Copyright 2008 Reuters

It was announced on brand republic last week that Google and Publicis have been working closely together for the past year and plan to step up their alliance with a proposed staff swapping system which could see “possibly hundreds of Google employees” taking placements with the huge media giant.  This strikes me as being slightly wrong, seen as Publicis owns Digitas, ZenithOptimedia, Zed and Starcom, all of whom work with the Google system for their clients, trying to get the best from paid and natural search results.

Surely there is something wrong with such an alliance which could potentially mean Google staff giving favourable treatment and inside information to agencies who operate in the search sphere, therefore giving them an advantage on the competition.  And if they did, it surely gives the Publicis owned agencies an unfair advantage in their market place.  Im sure the parties invovled are going to claim it is just to learn from each others strategies, processes procedures etc etc but theres has got to be more too it than that.  Am I the only one who is worried by this?

 Full article here