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Microsoft buying Yahoo – what does it mean?

February 2, 2008 //
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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.

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Categories PPC, Search Engine Marketing, SEO

Free media? dont make me laugh

January 9, 2008 //
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I read in article recently in marketing week entitled “Looking for new ways to make money in the age of free media” which discussed the rise of social media and its increasing strength and importance in shaping a brand and a products success.  The article began intelligently enough discussing the rise of user generated channels and their importance in online PR and reputation management.  This is all well and good and I completely agree with the importance of monitoring and managing a company or brands online profile to aid in its success.  But the closing question posed by the article was “how do they (agencies) get paid?” which I thought was pretty damn obvious.

There are two precious commodities involved in any successful online campaign which are rarely held by a client, expertise and time.  The majority of client side marketers (on or offline) would not know where to begin when looking at their online profile and certainly would not now the best way to leverage the channel to their advantage.  This is where a good agency steps in with the knowledge and the contacts to deal with things in the appropriate manner.  Then there is the time element which is one of the major reasons for any company taking on an agency for any activity.  Only the largest companies have a marketing team which can take on board all work in house and produce work of the desired standard, the majority are best served acting as project manager and the owner of the final decision and leaving their roster to get on with the real work, especially when it comes to something as time consuming as online reputation management.  When you combine these two factors you have a highly valuable, highly marketable product, and with consultants in many channels charging u to £5,000 per day I am surprised the writer asks such a naive question.  After all SEO is technically “free” yet there are countless companies out there charging for their expertise and time in this area, social media and online PR fall under the same category.

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Categories Social Networking

Microsoft sets its sights on 40% market share

November 19, 2007 //
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According to reports from Reuters, Kevin Johnson, Microsoft’s platform and services president, believes the company can gain a 40% share of the search market in the next 3-5 years. This is an ambitious target by anyone’s standards with Google holding a 80% market share at present it is difficult to see how they can achieve this from their own 6% hold at the moment.  Apparently they have a “10,20,30,40” plan suggesting this will be a slow build rather than a quick win. It certainly suggests they may be looking at acquisition to help them gain some share, perhaps a purchase of yahoo, and maybe even ask as this would tip them over the double figures mark and make the deficit a lot smaller. It could be a very interesting few years for the market if they are hell bent on achieving their goals as they certainly aren’t short of a bit of cash.  Mind you, neither are Google so it would be a very exciting shoot off if it comes to it.  Personally I cant see 40% begin achievable unless Google hit the self destruct button and do something which turns people against them.

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Categories PPC

Google Tests Pay-per-Action and In-Text Ads

March 28, 2007 //
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It has been coming for a while now, google are going to begin trialling coast per action advertising across its content network with publishers only receiving revenue when a specified action is completed. This makes the content network more appealing to advertisers and as the article suggests removes the temptation for click fraud. I believe more work is needed in order to make this a reality but as suggested in the article this spells trouble for other ad schemes working on a cost per action basis.

Google Tests Pay-per-Action and In-Text Ads

Google is testing, on a limited basis, a pay-per-action ad form that ties publisher payment to a specific action by those who click the ad, reports ClickZ. Advertisers define the action – an actual sale, signing up for more information or something else – and the publisher on whose site the ad appears would be paid only when that action is completed. Though that means publishers don’t get paid as frequently as in pay-per-click ads, the PPA model usually results in higher single payments.
Publishers will have more flexibility in choosing the ads that run and in encouraging visitors to take action on the ad. That sort of encouragement has been forbidden by Google as part of the AdSense terms of service (TOS) for other ads.
Michael Arrington at TechCrunch points out that a move to PPA model lowers advertisers’ potential exposure to click fraud, since they would only pay when a specific action is taken and not when an ad is clicked (a click is easily automated). He also predicts that this will have a severe and negative impact on ad networks already operating on a PPA model simply because they can’t compete with Google in terms of scale of reach.
Arrington also catches a smaller announcement in the Google AdWords blog post announcing the PPA test. Google will begin testing in-text ads, similar to those already offered by Intellitext and others. When visitors to a site running these sorts of ads mouse over the linked text, a box appears with the ad displayed along with “Ads by Google” text.
This would be the first ad offering by Google to break out of the separate ad box and into the text of the site’s content.

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Categories Google
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