• by Rob Griffin , August 3, 2009

I planned to write this week's article on the death of page views (I'll get back to that next time), but given the recent turn of events, I felt obliged to write this opinion piece instead. I'm usually the bitter, sarcastic guy -- and here I am defending a vendor, so this is a weird spot for me. I have spent the last day amazed at the consistent negative sentiments coming from the press, pundits, investors, and just about everyone but me. Yahoo is not dead. I feel like this reads like a script excerpt from "Monty Python and the Holy Grail":

Wedding Guest: Look! The dead prince!
Concorde: He's not quite dead.
Prince Herbert: Oh, I feel much better.

Now substitute everyone for the Wedding Guest, me for the Concorde, and Yahoo as the Prince (post-Microsoft deal) and you'll get the reference. Much of what I have read centers on the theme that Microsoft is the victor and Yahoo is the defeated. But let's take emotion out of this and look at the facts. Microsoft has the money, but is by no means an overwhelming success. For starters, Microsoft has continued to prove that it doesn't know how to be a media company or service clients.

I also believe that while Panama is a very inferior product, Bing is no Google-killer and Yahoo is still a very highly trafficked property. Bing has improved as a consumer search engine, but it does not beat Google's quality. I hate doing business with Google some times, but I find that as a consumer, the company still wins, no matter how hard I try to replace it. Microsoft's advertising, as fellow Insiders have written about a lot lately, is driving usage for Bing but it also lifting Google's market share. The only person to suffer, search-wise, is Yahoo.

Thankfully, all jokes aside, I'm not alone and do have a few souls out there to agree with me. I won't mention names but on one email discussion list one reader/writer commented that search isn't the only game in town. Even as a SEM-biased professional, I have to agree. The exception is for those only looking at conversions from a last click attribution perspective. Search is great and does perform wonderfully, but it is also the largest beneficiary of all other media.

Yahoo's bigger issue is that about 30% of its non-search inventory goes unsold, from what I hear, so if search isn't the company's only game, it better monetize the rest of that inventory real quick. So Yahoo may still die, but it is not because it gave search to Microsoft.

Yahoo did not admit defeat here but accepted what it is good at, as did Microsoft. I see this is a mutual need and not Yahoo bowing at the feet of the almighty. Microsoft needed better service and support, and had the cash to throw at a solution. Yahoo is not a good technology company, but is a massive online media company and did not have the cash to throw at its problems so by default Microsoft is in the driver's seat. Yet Microsoft gave up the sales of the two engines regardless of the fact that they will now share a common algorithm. Microsoft strengthened its technology business at the sacrifice of its media business.

I think this deal, while not a Google killer, provides options and opportunity for advertisers. I'm buying the party line because I see potential: one sales force, two consumer facing engines, one IO, and (in theory) the opportunity to fluidly move dollars between engines based on performance. This was always too hard as separate entities and so in many cases if we reduced the spend on one engine those dollars went to Google. This doesn't have to be so anymore. Looking ahead, the big focus points for me are:

1. Yahoo needs to replace lost SEM specialists because they have become a company of digital generalists. How will the company do this? Assuming it takes at least six months to get through regulatory review, Yahoo had better be ready to invest in staff and ramp up.

2. Will Cashback get rolled out to Yahoo shopping? To my point earlier, I was always a cynic on this and am amazed at the traction it has. But you have to wonder what will happen to it. Cashback on Yahoo Shopping could be a pretty powerful CSE.

3. Are there broader implications to read into this? Microsoft has essentially said it is a technology company while Yahoo is a media services company. Can we make some assumptions about how other products like mobile may get applied to this marriage at a later date?

In conclusion, I think both companies made strategic plays to strengthen their short- to mid-term positions. Honestly, who knows what we will happen in ten years? Did any of us see Google becoming the powerhouse it is 10 years ago? What we do know, though, is that the only losers here are Microsoft's search sales staff. Those focused on Cashback are safe and get a hall pass -- for now.