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It’s official, Yahoo, the original search brand, is outsourcing its search function to Microsoft. I don’t think either Microsoft or Yahoo had a choice. It’s a shotgun marriage.

Those work out all the time, right?

Coming out with something that is noticeably better than Google’s Search experience is the only way anyone will  take significant search audience share from them, because despite all the hype around Tweets and FB, Search is still the fundamental App that makes the Web useful and people need a real reason to switch from what they like and are used to.

Failing that (as Microsoft  has with every incremental redesign of their search offering, including Bing), Redmond probably figured why not buy a solid, if distant, second place?

Yahoo knows how this works: A combination of loyalty and laziness is the only reason they still have enough users that Microsoft is even interested in this deal.

So what does this mean for your SEM efforts?

As Wired points out in a good take on this deal, “…by capturing one opposing army, (Microsoft) dramatically simplifies the battle lines and creates a two-sided conflict.”

Google knows how to hit Microsoft where it hurts, most recently by forcing Microsoft to sacrifice its cash cow, Office, by making it available on line next year to counter Google Docs. So far, Microsoft has not been able to land an equally  solid punch on Google.

That has to make Steve Ballmer’s forehead all purple with the veins popping out, like the evil aliens in the original Star Trek pilot. I don’t think I could work for Ballmer. I first saw those aliens when I was like 6, and I still have nightmares about them.

ballmer-talosian

….but I digress…

One way Steve could finally get some would be to introduce serious competition in contextual text ads, the Web advertising form that Google invented and the only ad model that works on the Web (Exhibit A: They made Google $5.5 Billion last Qtr.).

Real competition from Microsoft in the form of lower costs per click could drive Adword prices down, which all by itself does nothing to take overall search audience share from Google, but it would hurt them where it counts — in the profits that Adwords generates.

That would be good news for search advertisers, who would be reaching more people for less money,  and it would be a win-win for Microsoft — they would make more than they are making now on contextual search  and they could finally land a punch on Google.

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  • 5 comments

    5 Comments so far

    1. London dude July 30th, 2009 8:43 am

      Ha! “shotgun marriage” lol…

      Actually the Google vs. Microsoft story is more interesting, who cares about Yahoo?! The Google Docs have been pretty annoying to Microsoft, let`s see what Apple thinks about the Android…

    2. John Rowles July 30th, 2009 11:36 am

      @ London: I’d love an iPhone, but hate At&T. Worst. Wireless. Carrier. Ever.

      I’m on Verizon, and they are finally getting on board with Android and not a moment too soon b/c the Verizon phone selection *blows*. It looks like there will be some sweet Android-powered Motorolla phones on Verizon in Q4.

      By aligning themselves with At&T and going along with their crippling of the device (no tethering? Really?) Apple has left the door open for Google and other carriers to offer a cooler work around…Ironically, that is exactly what Apple did to PCs.

    3. steveballmer July 30th, 2009 6:07 pm

      I love it when an intricate, fiendish plan comes together!
      Here is the She-CEO of Yahoo (Carol Bats) and myself signing the final agreement to give Microsoft control over the entire backend for Yahoo’s entire search! Yahoo will handle ads, marketing, hosting and all that kinda’ crap, but we will be the ones in charge of the main product, SEARCH! I was so happy as I was signing this that I almost … well, I was happy!
      The She-CEO tried to put a good spin on Yahoo’s surrender, she said,
      “We never really liked search anyways! We are letting these people handle that stuff while we pursue the cool stuff ya’know!”
      Miss Bats, have you ever heard of a Puppet master?
      Oh well, it has been a VERY good week here at Microsoft! Very good indeed!
      (In the meanwhile, the man who opposed me at Yahoo (The Vagrant Yang) continues to marinate in his own feecees on the streets of Redmond!
      http://www.flickr.com/photos/ballmerrockz/3741197526/
      Let him be a lesson to all!

    4. John Rowles July 31st, 2009 6:42 am

      @FakeSteveBallmer:

      Thank you for taking time away from your celebration of your evil, evil deeds to comment on my post.

      I hope you were not offended by my comparison of you to a Talosian. It was meant as a compliment. I swear.

    5. Thomas Johnson July 31st, 2009 1:16 pm

      @fakesteveballmer:

      Careful with the backend of the SheCEO. It could be problematic there, big guy. Not to take away from your conquest, mighty one!