Sunday, May 13, 2007

 

The Microsoft-Yahoo To-Do

As one might expect, the media world reacted with great frenzy a couple Friday's ago, when out of the blue the imminent purchase of Yahoo by MSN seemed to become a formality virtually overnight.

Yet, by the end of the day, the deal was dead according to many of the same outlets that reported the "intense" talks just hours before. It was amusing to think of all the pundits out there scrambling to write in their blogs and online columns, trying to put their own spin on the merging of these two industry giants. Then, only to find out that before they had finished their first paragraph, their thoughts were alreadyirrelevant and old news. Such is the speed of the information highways these days.

But the real story is this. Microsoft and Yahoo aren't ready for this marriage. Before Microsoft and Yahoo can start a serious relationship, they should really consider some serious introspection and self-help programs for their respective ad programs. Anyone who thinks that either company can compete with Google simply by joining forces has never clicked mouse inside adCenter or the Panama interface.

And isn't that what it really comes down to? How well these two companies can monetize search traffic? Neither can hold a candle to Google's dominance in this sector. How would Microsoft-Yahoo, with a combined market share still some 15 points lower than Google, be expected to compete any better in the foreseeable future?

While Panama and adCenter both offer demographic targeting options and some other potentially promising features Google is lacking, neither platform is as robust as Adwords or as proficient in generating ROAS. Google is simply bigger and better. Until something is done by Microsoft or Yahoo to legitimately challenge the superiority of the Adwords platform, how is some minor market share increase to a less distant #2 player going to shift ad budgets away from Google?

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