Tuesday, July 28, 2009


Microsoft Yahoo Search Insemination

Per AdAge, the Microsoft/Yahoo search deal will be announced tomorrow.

  • Yahoo will sell the search advertising exclusively.
  • Microsoft's adCenter will power the search ad platform.
  • Bing will be the default search engine on Yahoo.
No word on what this means for each company's respective display offerings.

Last week I speculated a bit on the deal for a MediaPost news piece and picked up the thread of what they'd call the combined entity on the Connectual blog. On the latter, a commenter suggested Bingya and I must say, I love it!

Pretty sure they'll just use Bing though. Too much $ dumped into that brand to stray.

As for the implications on what this deal means for the search space, for now I'll just say that we should have plenty of time to speculate. Methinks the DOJ will take a hard look at this.

Update: I'm kinda surprised/impressed that Yahoo retained the rights to sell the ads.

It makes sense, though, that Microsoft wants to focus on technology. Its intentions to sell off Razorfish speak to the fact that it recognizes its core competency is tech not media or advertising.

Yahoo, on the other hand, is a media company first and foremost. Retaining the ad sales aspect will allow it to do some cool things in terms of behavioral and search retargeting across its various properties.

Hmm, Microsoft good at technology good, bad at advertising. Yahoo, bad at technology, good at advertising. Where have I heard that before?

Oh yeah, May 2007 when I told MediaPost, "Microsoft and Yahoo are a perfect match for each other... because of Microsoft's historical deficiency in creating scalable digital advertising solutions and Yahoo's corresponding deficiency in creating scalable technology solutions to deliver better advertising. Bring these two together and you have a company that can excel on both sides of the equation."

More on that thread in this post on the Resolution Media blog from Feb. '08 -- back when we were still calling it Microhoo.

Update 7/29: It's a done deal! Here are the terms:
  • 10 year contract
  • Yahoo uses Bing
  • Yahoo keeps 88% of all rev.
  • Yahoo has right to "sell ads on some Microsoft sites"
Apparently, Yahoo expects the deal to "boost its annual operating profit by $500 million."

Of the many Q's this deal raises is what will become of Yahoo's paid inclusion platform? For the sake of all the businesses that were built on top of YSSP (eg, trusted feed partners) I hope they keep it intact. More to follow.

Update 7/29 #2: Another burning Q is how they will combine the 2 sales teams. I have good friends and colleagues on both sides and, for their sakes, hope there isn't any attrition. But I can't imagine how everyone would keep their jobs given that Yahoo and Microsoft each have salespeople calling on the same accounts and agencies. Can't see how they justify doubling up especially as the combined entity becomes even more of a must-buy (read: easy sell).

Update 7/29 #3: Just as Google did when it announced its deal with Yahoo, Microsoft has a site designed to proactively address any Q's about competition and other issues the DOJ may have -- ChoiceValueInnovation.com (excuse me, I just threw up a little in my mouth there).

The site does contain some more interesting nuggets about deal terms:

  • MSFT and YHOO will handle display separately
  • YHOO will "own" the UI for search (guess we won't see those pretty Bing homepage pics on Yahoo.com)
  • MSFT will guarantee revenue to YHOO for the first 18 months
  • Full implementation "expected to occur within 24 months following regulatory approval
Update 7/29 #4: Just posted my thoughts on another looming Q -- Will the Microsoft Yahoo Deal be Good for Google?

Update 7/29 #5 (Well, technically it's 7/30 now): Decided to turn this list of unanswered questions into a more complete post (my second Top Ten list of the day) on the Connectual Blog: "Yahoo Microsoft Search Deal: 10 Most Interesting Plot Lines."

Update 8/5: eWeek scoured Yahoo's 8-k filing to reveal some interesting deal terms:
  • Yahoo may terminate the deal if Bing's revenue per search is less than Google's
  • Yahoo gets first right of refusal if Microsoft decides to sell its search business
  • Both sides can kill the deal if its not consummated by 7/29/10
  • After 5 years, Microsoft will have the option to terminate Yahoo's sales exclusivity (and bump its rev share to 93%)
  • Microsoft will pay Yahoo $150mm over the next 3 years to cover "transition and implementation costs." (Not quite the "boatloads" of upfront cash Yahoo stockholders were expecting.)
  • Microsoft must hire 400 Yahoo employees plus 150 for "transition services"

No comments:

Related Posts with Thumbnails