• by Wister Walcott , July 7, 2008

By now we are all aware that paid search is a dynamic and competitive business, but every so often we are reminded just how true this is.

I'm referring to the Yahoo/Google June 12 announcement of a non-exclusive advertising agreement. Under this deal, Yahoo will be able to show Google paid search ads on Yahoo search engine results pages and elsewhere in the Yahoo network. What, if anything, should you do to your paid search program based on this announcement?

The press release and the subsequent conference call provided some detail, but not enough to clarify what this deal will mean to the search marketers who use Google and Yahoo every day. Instead, for search marketers in the trenches, many unanswered questions remain. First of all, when does this partnership go live? Initially, the parties said they would wait 3 1/2 months to allow for Justice Dept. informal review--but it could take longer than that. As of July 2, the Justice Dept. opened a formal antitrust review of the deal, and no go-live timetable has been announced.

The other key question on most search marketer's minds is: what will this pact do to paid search ad performance? Marketers wonder which ads will appear on Yahoo pages, and what percentage of ads on Yahoo pages will come from Google. These uncertainties are leaving many SEM pros shaking their heads, wondering whether they should change their campaigns (and bids) to reflect a likely Google-Yahoo tie-up.

At Marin Software, we are advising our clients to hold steady with their current programs. Our advertisers are large, spending more than $50,000 a month on paid search, and already have fully developed campaigns on both Yahoo and Google, as well as MSN. It's simply too early to make any adjustment to your search program based on this pending agreement. Your best bet is to make sure your search campaigns are well developed on both Yahoo and Google. Once the day-to-day workings of the new ad pact become clear, it may become worthwhile to tweak your programs to take full advantage of the partnership.

What we do know already is that under the current terms of the pact, Yahoo will determine the placement and number of Google ads that appear on Yahoo If there are too many Google ads on Yahoo, the regulators may have something to say about it; too few, and Yahoo doesn't benefit enough financially from the deal. Unfortunately, search marketers are caught in the middle of this delicate negotiation.

As a search advertiser, your goal is to make sure that your ad is shown to the right prospect at the right time, and that the ad performs consistent with your business goals--customer acquisition cost of $X, lead generation cost of $Y, etc. Until more details of the new ad pact are made clear, to make sure your ads appear and meet your business goals, we recommend continuing to bid on Google and Yahoo separately, based on the performance of each individual keyword on the specific search engine.

As a search marketer, your job is never done--because the search engines are constantly changing their algorithms, platforms, policies and agreements with one another. The pending Yahoo/Google ad pact is just another reminder of this. Keep a close eye on your campaigns and their performance--and be ready to quickly alter your strategy when the details of this historic deal become clear.