Search is big business. Whilst, as a company, we have only dipped our collective toe in the waters, with a couple of Pay Per Click projects, some Optimisation pieces and most recently (courtesy of Herts Police) a venture into Social Media Marketing, the global search market is fiercely competitive. And for those companies that get it right, incredibly lucrative. The problem is that search is dominated by one company, Google. With an estimated market share of between 65% and 80%, Google’s dominance is such that “to Google” has become a generic word for searching (rather like “Hoovering” became the de facto word for vacuum cleaning.)
Recently, there have been efforts by the competition to raise the game by focusing on improving the product quality: Yahoo! upgraded its search algorithms to make its results more accurate than Google and Microsoft recently released a replacement to their engine, called Bing. However, nothing seems to have dented Google’s dominance.
So, after a long and arduous courtship, a deal has recently been announced between Microsoft and Yahoo! As it is something that I’m sure our clients will be interested in, I thought to outline the basics of the deal:
• Bing will become the search engine used by both Microsoft and Yahoo.
• Microsoft AdCenter will become the single search advertising platform.
• Yahoo will focus on media, marketing services, and sales.
What does each party stand to gain?
Whilst Yahoo’s share fell slightly after the deal was announced, Microsoft’s has remained stable and the industry seems to feel that this is a positive move for both companies: Bing usage has been growing at an average of 25% per week, but this has primarily been at the expense of Yahoo Search and it is yet to dent Google’s market share. The deal will instantly provide Bing with almost 30% of US internet queries and save Yahoo $200 million in search engine technology development costs. Advertising prospects for the combined systems should also improve. Yahoo and Microsoft both offer effective search advertising platforms, but advertisers often choose Google because it receives significantly more traffic.
Will it work?
The link up will not be easy and both companies expect scrutiny from the US Department of Justice. The Google-Yahoo advertising alliance failed in November 2008 partly because of DoJ opposition. Ironically, Microsoft was the biggest and loudest complainer about that deal.
Also, tech mergers have a history of failure: jobs are bound to be shed from both companies and the cultural amalgamation aspect always proves to be difficult for such firms (perhaps they need our help on developing and implementing an Employer Brand?) However, this is a ‘partnership’ not a merger, so perhaps this is just me being cynical. Verdict? The jury remains open: keep watching this space.