Roundup: Microsoft-Yahoo Search Deal

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Well the big news of the day has been the big Microsoft-Yahoo Search deal that was announced this morning.  All the search marketing blogs, tech blogs, news sites, and everyone else has been talking about it.  With the avalanche of deal information and opinion out there, we thought we’d wade through the content and post some links to the stories and posts we found to be the most interesting.

Before we get to the round-up list, let’s quickly go over the basics of the deal.

  • The term of the agreement is 10 years.
  • Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies, and Microsoft will have the ability to integrate Yahoo! search technologies into its existing Web search platforms;
  • Microsoft’s Bing will be the exclusive algorithmic search and paid search platform for Yahoo! sites. Yahoo! will continue to use its technology and data in other areas of its business such as enhancing display advertising technology;
  • Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform, and prices for all search ads will continue to be set by AdCenter’s automated auction process;
  • Each company will maintain its own separate display advertising business and sales force;
  • Yahoo! will innovate and “own” the user experience on Yahoo! properties, including the user experience for search, even though it will be powered by Microsoft technology;
  • Microsoft will compensate Yahoo! through a revenue sharing agreement on traffic generated on Yahoo!’s network of both owned and operated (O&O) and affiliate sites;
  • Microsoft will pay traffic acquisition costs (TAC) to Yahoo! at an initial rate of 88 percent of search revenue generated on Yahoo!’s O&O sites during the first five years of the agreement; and
    • Yahoo! will continue to syndicate its existing search affiliate partnerships
    • Microsoft will guarantee Yahoo!’s O&O revenue per search (RPS) in each country for the first 18 months following initial implementation in that country;
  • At full implementation (expected to occur within 24 months following regulatory approval), Yahoo! estimates, based on current levels of revenue and current operating expenses, that this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo! also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million; and
  • The agreement protects consumer privacy by limiting the data shared between the companies to the minimum necessary to operate and improve the combined search platform, and restricts the use of search data shared between the companies. The agreement maintains the industry-leading privacy practices that each company follows today.

It is important to note, that the integration of Bing and Yahoo core search could take up to 24 months to complete.  So this isn’t going to turn your SEO campaign on it’s head overnight, but it is important to keep tabs on the merger over the coming months and begin to develop a strategy to address the new, more important Bing search.

Microsoft-Yahoo Search Deal News Roundup

Microsoft press release: Microsoft, Yahoo! Change Search Landscape

Yahoo! blog post: What our Microsoft deal means to you

Henry Blodget gives his first take on the Microsoft-Yahoo deal over at businessinsider.com

Rand Fishkin published a great post at SEOmoz about the Top 10 Things the Microsoft/Yahoo! Deal Changes for SEO

From TechCrunch:

Yahoo Search Powered By Microsoft Bing: What SEMs Need To Know from Search Engine Roundtable

It’s Finally Official, Microsoft & Yahoo Make A Deal, Yahoo Gives Up On Search from Search Engine Land

From Marketing Pilgrim:

Feel free to add links to other interesting opinions about the deal in the comments section.

Marketers Preparing for Pricier PPC Ads

MediaPost published a great article yesterday about the increasing costs of paid search and how marketers are coping by investing in natural search. The article includes many quotes from Tim Kauffold, director of business development at Oneupweb.

The following are some of Mr. Kauffold’s quotes from the article along with some of my thoughts on the issue.

“In most cases, natural and paid search campaigns perform better together than they do separately. Greater awareness of a Web site created by a paid ad can lead to more natural traffic. In similar fashion, people are logically more likely to click on a paid promotional ad of marketers they recognize, such as those they’ve encountered during a natural search.” -Kauffold

I would also add that paid search and natural search campaigns perform better together through shared data analysis. Paid search campaigns provide detailed data about which keyword phrases are performing the best. This data is also great at spotting keyword trends like what keywords have increasing conversion rates and vice versa over a given period of time. Marketers can use this keyword data for their SEO campaigns to optimize content around those keyword phrases. On the flip-side, traffic data gathered from search engine optimization can give insights into user behavior on your website. These insights can help marketers improve the quality of paid search landing pages.

“One of the things that surprises marketers–particularly those who have been using the media for several years–is how the costs are rising. They think, ‘Why doesn’t the same dollar buy me the same volume it used to?’ But there are really big inflation numbers with cost-per-click. It’s still a great avenue, but as more folks jump in, costs are going higher.” -Kauffold

I briefly covered this basic market concept about two weeks ago in our post covering the Kelsey Group’s annual forecast, but it’s worth repeating here. As Kauffold says, paid search is still a great avenue but costs are increasing. Companies that optimize for natural search will reduce their dependence on paid search for leads and customers.

“Paid search is a media buy, and natural search optimization is an investment in the site itself, and that can take some time–maybe even a few months–to see results,” -Kauffold

This statement pretty much speaks for itself, and it is a statement that is important to remember. Many large companies and tech/internet related companies have known this for years. However, many small businesses and franchise companies are just beginning to realize the importance of natural search optimization and how long it takes to see results. If anything, undertaking a search engine optimization campaign is all about building a foundation for the future.

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