Analysis: How The Microhoo Deal Threatens Google

bing/googleWhile the recently announced search partnership between Yahoo and Microsoft fails to rival Google in absolute terms, their combined resources will threaten the search giant more than ever, according to new analysis from comScore and marketing analytics company Covario. "The recently announced search partnership between Microsoft and Yahoo certainly makes the combined entity a more formidable competitor to Google in the U.S. search marketplace," said Eli Goodman, comScore Search Evangelist.

In June 2009, Google sites had a 66% share of searches in the U.S. core search market, compared to 28% for Yahoo and Microsoft combined. (Independently, Yahoo represented 19.6% of the search market, while Microsoft made up 8.4%.)

However, although it lagged considerably in terms of overall search share, the combined searcher penetration of Yahoo and Microsoft was 73.3% -- not far behind Google at 84%.

The source of the discrepancy between search share and searcher penetration is that searchers on Google conducted significantly more searches on average in a month -- 54.5 -- than did searchers on Yahoo and Microsoft -- 26.9.

"While they are still looking up at Google in terms of market share, they have a real opportunity to make headway, given that nearly three-quarters of all searchers conduct at least one search on these engines every month," Goodman said with regard to Yahoo and Microsoft. "The challenge will be to create a search experience compelling enough to convert lighter searchers into regular searchers, which is generally easier than converting new users," he added. "Though clearly easier said than done, if they were to equalize the number of searches per searcher with Google, they would command more than 40% market share." Separately, Yahoo and Bing -- with 20% and 8% of the market share, respectively -- are unable to efficiently meet the inventory needs of advertisers that are attainable through Google, according to Craig Macdonald, CMO and SVP of products for Covario.

"The combination of the two platforms, however, gives advertisers the ability to reach about 30% of the search market in a more efficient manner -- which may drive an increased market share post-integration," said Macdonald. "A market share of 30% also represents a critical threshold that many marketers feel is necessary for them to justify the investment of national marketing dollars in a particular program." ComScore also conducted an analysis of search loyalty among users of the top three engines in order to determine what challenges exist for the Yahoo-Microsoft partnership.

The analysis examined the use of the various alternative search engines by users of the Google, Yahoo and Microsoft engines, revealing that those who searched on Google had the highest loyalty rate, with 68.9% of all their searches occurring on Google Sites.

Users of the engines at the combined Yahoo and Microsoft sites conducted 32.6% of their searches on the combined Yahoo and Microsoft sites, but a much higher 60.7% of their searches on Google sites.

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