Microsoft and Yahoo Search Merger Has Been Approved! What We Can Expect

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Last Thursday, Feb 18th, we received word that Microsoft and Yahoo have received regulatory clearance to form the Yahoo and Microsoft Search Alliance in the United States and European Union.

Basically Bing will become the search engine underlying Yahoo’s web sites.

Once this is complete it will essentially become a two search engine world in North America and most of Europe – Google and Yahoo/Bing.

The goal is to complete the alliance in the US by the end of 2010 with other countries following on a staggered schedule beginning in 2011.

What we can expect for Search Adversting (PPC)
We’re excited as the alliance should lead to more search results at a lower cost for most search advertisers and open up new search opportunities for search advertisers with smaller budgets.

One, larger Network. Search ad inventory from both the Yahoo and Microsoft networks will be joined in a new, unified search marketplace powered by Microsoft’s Bing™. The combination of Yahoo’s approximately 14-15% search share with Bing’s approximately 10% share should result in one search network with about 25% of search share (with Google at about 65-70% search share)

Possibly lower costs per conversion. Our experience shows that Bing often has lower cost per conversions than Yahoo so if that lower cost per conversion occurs for yahoo’s searchers after the cutover we expect to see lower cost per conversions from Yahoo’s search advertising market.

Lower PPC management costs.  For our clients that were running on all three networks, Google, Yahoo and Bing, once we are able to implement and manage two networks instead of three we’ll be able to offer lower PPC management costs.

A second PPC network may soon be viable for many advertisers with smaller ad budgets. Currently there is often not enough volume on Yahoo or Bing to justify the cost of managing either or both Yahoo and Bing campaigns.

With the Yahoo and Bing search alliance the search volume will be higher than either current network alone while the cost to implement and run campaigns should be about the same as running one network.