• by Chris Copeland , April 2, 2010

Some are born great, some achieve greatness, and some have greatness thrust upon them -- Shakespeare, "Twelfth Night" 

I've spent most of the last month engaged in a knowledge quest to better anticipate the direction major players in search and social media are planning to take in the coming 12 months. The tour kicked off in Redmond, Wash. with Microsoft and concluded last week with a visit by Yahoo CEO Carol Bartz to discuss the current and future state of Yahoo with the GroupM Search leadership. It's probably no accident that the bookends of this process are two players in the space who are banking on greatness coming from the combined power they bring to the marketplace.

What was clear to me after these discussions is that these companies have a shared plan on the path forward, as well as divergent objectives and strategies for their own properties. What's not as clear is whether these companies are setting out to achieve greatness or rather hoping that they can bottle the lightning and have it thrust upon them.

The Yahoo/Microsoft deal moves the market needle up for Microsoft from its own level. That helps relevancy from an algorithm point of view, but what about allowing advertisers to improve relevancy directly?

For years I've howled at the moon over third-party ad serving in search. If the end goal of relevancy is to give users the best connection to their expressed intent, then allowing advertisers to stop advertising when people don't click on them time after time, or switching up creative based on inactivity on the brand listing would be an improvement, right? We continue to gravitate toward a single platform that will ultimately allow advertisers to buy search and display. So, if you are Microsoft, why not provide more intelligent and valuable solutions for advertisers in this area?

That being said, there's one piece of this deal that I continue to hear little about. Today, advertisers buy two distinct marketplaces. At the conclusion of this deal, advertisers will suddenly buy Yahoo and Bing as one: same bid, same creative, single view of keyword-level reporting. Most advertisers know that these marketplaces behave quite differently. A recently released SEMPO study of the search industry detailed that barely 50% of all advertisers surveyed are buying Yahoo, and fewer still buy Bing; therefore, you need to simplify and engage the masses better. Still, when you attempt to increase the supply of advertisers and force the existing ones to blend their bidding, the likely outcome is a cost increase, which threatens to pale the impact experienced today when you buy a single answer via Google.

Compounding this is the present decision of Yahoo not to migrate Bing Cashback into their offering. One of the few areas where Bing has really distinguished itself in year one is in this area. Advertisers who today message and bid based on their variable Cashback offers now must do so knowing that a vastly larger portion of the market share will not be afforded the benefit of the listing; and the price value being made is done without full value being returned from Yahoo. I sense a desire to study and get deeper on this from Yahoo, but a program that comes to market without this is a hole in the results page.

Speaking of which, nothing surprised me more than the statement from Yahoo that the Bing algo and paid content represents only two of 24 elements that go into creating a results page. Yahoo has kept and continues to work around the fringe on innovation to the format and construction of this experience.

What will be interesting is to see where and how Yahoo tries to create value for its audience to stem the tide of market share losses seen in the last few months. Spend any time with Yahoo at a high level and you'll find a strong commitment to a unique experience around search, including beyond just what gets ported over from Bing. This is crucial for market share growth.

More importantly long term than giving up search technology for Yahoo is its decision to get away from toolbar distribution deals. These deals have dramatic sway over search share and Microsoft is more than willing to buy ahead of organic growth. For Yahoo to keep its base it has to evolve, and there are signs, mostly verbal at this stage, of doing that.

On both sides of the fence, Yahoo and Microsoft have much to gain, and lose, in the coming months. Advertisers have warranted concerns about technology and transitions and the players have to keep pace with Google while trying to be integrated.

But those are table stakes for this game. People like to suggest that search is in its early innings; and while that may be true, this is no excuse not to compete from the outset. If the goal is to be in the game and to be viable as another choice, then the industry is about to settle for good. This is no time or place for the faint of heart -- and fortunately for Yahoo, that's not a phrase you'd ever associate with Bartz. Harry Gray, former chairman of Mott Corp, once said, "No one ever achieved greatness by playing it safe." Now is your time, Yahoo and Microsoft. Be bold, be great.