Microsoft, Yahoo Begin Long Paid-Search Integration Journey

The tough work begins now that Microsoft and Yahoo reported Thursday receiving approval from both the U.S. Department of Justice and the European Union to move forward on the search deal aimed at giving Google some competition. Advertisers may want instant results, but those willing to stick it out may find more opportunity at the other end.

Once complete, the search results will feed from Bing into Yahoo Search through an API. Yahoo will take the feed and present the results for how it wants people searching on Yahoo Search to view them. Paid-search ads will match to the query results. Yahoo also retains the rights to design sites like Yahoo Olympics, which recently attracted 9.3 million unique visitors to watch the games from Feb. 8 to 14, according to comScore.

Not all the details are in, but Adam Sohn, Microsoft senior director in the online services group, tells MediaPost that paid-search ads will feed into Yahoo Search through Microsoft's ad platform adCenter. Campaigns running on Yahoo's ad platform Panama will start moving to adCenter.



Advertisers will purchase ads through one marketplace for both Microsoft and Yahoo paid-search ads. The bid auction model remains the same. Companies with smaller accounts will go directly through adCenter. Yahoo will continue to support and sell ad space to premium search customers with larger accounts.

Microsoft and Yahoo will continually reach out to customers, but about 90 days before will start holding their hand to take them through step by step. Aside from phone, email and webinars, the two companies will communicate the transition to advertisers through a dedicated Web site.

It's not clear if Bing will power Yahoo Mobile search or what Microsoft will do with Yahoo's advertising platform known as Panama. Sohn says Microsoft has a license to use the technology. Transition team leads have been appointed to the respective companies to review features and decide what, if any, will become integrated to the combined platform.

Jokingly, one Wall Street analyst estimates it could take 10 years, but eventually add positive growth on both Microsoft's and Yahoo's balance sheet. The Microsoft and Yahoo transition teams spearheading the project think they will have the United States complete by the end of this year, but may wait until 2011 if they find it disrupts sales for retailers during the holiday season. All global customers and partners are expected to transition by early 2012.

Major engineering milestones might require the team leads to pull in top-level executives before implementing processes and procedures. Sohn says Microsoft will make Bing Mobile available to Yahoo, but it's up to the Sunnyvale, Calif. company to use it. No decision has been made.

Dave Tan, vice president of Innovation and Product Development at Resolution Media, believes Microsoft and Yahoo have the perseverance to push through and become a formidable Google competitor, but whether they make "great strides" quickly, which everyone continues to look for, remains difficult to tell.

Microsoft and Yahoo explain in a letter to advertisers not to expect immediate change to their Yahoo Search Marketing account. Once implemented, the two companies expect -- based on comScore numbers -- the change to reach up to 150 million searchers and get approximately 62% more search volume than on Yahoo alone.

Today, Google dominates about 70% of the search advertising market in the U.S. and 90% of the European market. Microsoft's and Yahoo's general council in a joint post remain hopeful that the agreement will become the first step in creating a viable competitor to Google.

As algorithms and relevancy improve, which is one benefit that scale should bring, marketers hope the quality of results will improve. Kevin Lee, Didit CEO, believes Microsoft's strength resides in its deep pockets and willingness to continue to iterate and improve the technology to keep up with Google, possibly even leapfrogging Google with important functionality. For Yahoo, the strength resides in its sales team coverage due to their leadership in online display advertising.

"The search engines are most interested in power searchers, and in particular those heavy power searchers who also are transactors -- meaning they buy stuff," Lee says. "Marketers judge an engine based on volume delivered as well as ROI and an engine that captures the power searchers and those who transact will have a huge advantage."

David Goldman, senior search specialist at MRM Worldwide, has been waiting for this day for a long time. The joining of the two search giants will very likely help generate much-needed competition for Google, and many advertisers only running on Google today will likely begin advertising with the combined Microsoft and Yahoo platform, but it's not clear if that will become significant fodder to increase market share.

"People will very rarely only run search ads on only Microhoo," Goldman says. "The majority will run on both Google and Microhoo. I personally think Microhoo will gain a larger share of the search space through strategic advertising and partnerships. Microhoo will need to run their own Super Bowl commercials and find the right advertising opportunities."

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