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Search Shakeup: The New Yahoo/Bing Deal Simplified

Lee Goldberg
Search Shakeup: The New Yahoo/Bing Deal Simplified
Lee Goldberg

As the head of Vector’s amazing Digital Marketing department, I tend to get excited when the landscape changes in such a way that our clients could benefit. On April 16, 2015, Microsoft and Yahoo announced a major change to their Search Alliance deal that will have meaningful benefits to advertisers. As an agency specializing in Paid Search, for us it’s all about having precise control -- Control over where ads appear, how they appear, and how much those ads cost. The new deal will let us address one of the major areas of weakness of the original Search Alliance.

Of course, when most of us think “search”, the first word that comes to mind is typically Google. This makes sense: Google owns about 65% of the market, and the company name has become a verb. But what about the remaining 35%? Well, Yahoo and Bing make up the majority of it. Sometimes competitors and sometimes partners, the two companies have struggled to increase their share against Google, so in 2009 Microsoft and Yahoo formed a “Search Alliance”. The idea was that two players together would be more powerful than either single entity in the war against Google.

The Old Deal

The Search Alliance was pretty simple in concept. At its core, searches done on Yahoo would yield Bing-powered results on desktop, both for organic listings and paid results. Yahoo didn’t have to give up its mobile searches, but did anyway, and the results on the two search engines mirrored each other almost exactly. While Yahoo had invested in core search technology prior to the Search Alliance and had a robust advertising platform, they’d give that all up and focus on their core display and content businesses. From an advertiser and agency point of view this all sounded great, as we’d now have only two search engines and ad platforms to worry about instead of three.

Gradually throughout 2009 and 2010, Yahoo advertisers were transitioned to the Bing platform, with the promise of more volume, more clicks, and more conversions. The problem is that users didn’t follow suit, and while Bing and Yahoo gained market share, they basically wound up stealing from each other rather than eroding any meaningful amount of share away at Google. As a result, “Revenue Per Search” (RPS) failed to grow to the levels that were promised, to the point where Microsoft was actually making annual payments to Yahoo to make up at least part of the shortfall. Because click volume on the Yahoo/Bing network was so low, many advertisers would neglect it all together, choosing instead to just focus on Google.

It was clear that the Search Alliance never lived up to what was promised.

The New Deal

After much negotiation, a new deal has been hammered out that could change the search landscape for advertisers, agencies, and users alike. Here are the key points of the new deal:

  • 51% of all desktop-based searches on Yahoo need to be powered by Bing
  • The remaining 49% of desktop searches could come from anyone - Yahoo’s own technology, a third party, or even Google (assuming the FTC is OK with it)
  • Yahoo is able to do whatever it wishes for smartphone and tablet searches. As of now, mobile ads for Yahoo are going to run thru its Gemini platform, which also powers native ads
  • In the past, Yahoo was selling search ads for premium brands and advertisers for both Bing and Yahoo. Now, Yahoo will sell Yahoo ads, and Bing will sell Bing ads

What Does it All Mean?

For advertisers and our clients this new deal has some major implications.

First, it means that we’re going to go back to having to run and manage three different platforms for search - Google AdWords, adCenter for Bing and part of Yahoo desktop, and Yahoo Gemini for Yahoo mobile. This means more work for advertisers but the payout should be worth it.  Advertisers will have more control over where and to whom your search ads appear, which should lead to a better ROI. This was, in our opinion, the major weakness of the original Search Alliance because Bing and Yahoo were lumped together without the ability to bid or budget differently by platform. That’s all going to change now, as we’ll be able to apply real time bidding strategies for Google, Bing, and Yahoo independently.

Next, advertisers should expect less volume from their adCenter campaigns, as part of Yahoo’s desktop results can now be powered by someone else. This means that budget can be reallocated to potentially higher performing engines or different channels altogether (like display or retargeting, for example).

While there are still many unknowns to the new deal, one thing is certain: The landscape is going to be changing. We’ll continue to keep you posted on the latest developments.

(Photo by Jack W. Pearce from Foter / CC BY-SA)

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