Microsoft’s Bing To Power Yahoo Search… What Does It Mean For Internet Marketers?
By Anna Johnson on July 30th, 2009It’s official: Microsoft and Yahoo have reached a deal whereby Microsoft’s Bing search engine will now power Yahoo search. Together, Bing and Yahoo will now account for 28.4 percent of the search market, based on comScore data.
Under the agreement, Microsoft will acquire an exclusive 10 year license to Yahoo’s core search technologies, and Bing will become the exclusive algorithmic search and paid search platform for Yahoo sites.
Each company will maintain its own separate display advertising business and sales force, but Yahoo will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers.
Microsoft’s AdCenter platform will fulfill self-serve advertising for both companies, and AdCenter will set prices for all search ads.
Microsoft will pay Yahoo through a revenue sharing agreement on traffic generated on Yahoo’s network of both owned and operated and affiliate sites. For the first 5 years of the deal, Microsoft will pay for traffic at the rate of 88 percent of search revenue generated on Yahoo’s owned and operated sites. Yahoo, meanwhile, will continue to syndicate its existing search affiliate partnerships.
The deal – which is still subject to regulatory approval – is estimated to be worth an extra $500 million in annual operating income and $200 million in capital expenditure savings to Yahoo. In cash flow terms, Yahoo expects to get around $275 million in extra cash flow per year.
So what does the deal mean for Internet marketers?
It sure does change the search marketing landscape. On the one hand, the deal reduces the number of major search engine competitors from three to two. In general, less competition is a bad thing as there’s less incentive for any one company to do better.
In this case, however, by combining forces, Microsoft and Yahoo may offer a more formidable competitor against Google, which has dominated the search landscape for many years now.
The deal may also provide greater efficiencies, economies of scale, and fewer administrative hassles for some Internet marketers. In the past, it may have been a hassle having to manage paid search accounts on each of the major three search engines, with the lower market share of Yahoo and Microsoft not warranting the effort required. Now, with nearly 30 percent of the search market, the Bing/Yahoo search engine may have greater appeal.
Then again, other marketers may find it a bit more difficult to take advantage of those little-known search engine marketing opportunities if more of their competitors converge on Bing/Yahoo.
Of course, the big question is: can even a combined Bing/Yahoo search engine beat Google? Interesting times ahead…
