The Potential of Mobile Marketing
by Katie Patton, Search Engine Marketing Specialist

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The potential Microsoft buyout of Yahoo! has officially come to a close. The five month quest ended when Microsoft declined to accept Yahoo! CEO, Jerry Yang’s counteroffer of $37 per share for the buyout. Yahoo! is now looking to Google Inc. to handle some of its advertising sales. The Google partnership expands upon a two-week trial conducted in April, while Yahoo! was trying to pressure Microsoft into raising its bid. The tests confirmed that Google's technology would generate more revenue for Yahoo! than its own system, which cost more than $2 billion to acquire and improve. The deal would enable Yahoo! to continue competing in its two main lines of business, search and display advertising; and also allow them to continue to invest in improving its own search and advertising businesses. The partnership would be for four years and can be renewed for two terms of three years. The deal can be rescinded if either company has a change in control, such as an acquisition. However if the change in control occurs at Yahoo! in the next 24 months the company has to pay a $250 million penalty fee to Google to end the deal.

If the deal goes through, no changes will occur until September at the earliest because both companies have agreed to give the Justice Department time to review it. Google and Yahoo! have hopes they can overcome the antitrust concerns by convincing lawmakers and regulators that their deal is similar to business arrangements between rivals in other industries.

According to a Yahoo! representative, if the deal goes through, it does involve Yahoo! showing ads from Google on their Search Network, but does not include Content Network ads at this time. According to Yahoo!, the ads from Google will be used only as backfill. Yahoo! will use Google ads only for keywords that no advertisers are currently bidding on. Essentially, this allows them to make additional money on keywords that they historically haven't made money on. Google ads will not be used for keyword phrases which they already have a page full of advertisers bidding on; they will only be used for keywords where zero, one or two advertisers are currently bidding.

The arrangement is non-exclusive and does not require Yahoo! to use any certain number of Google ads. Yahoo! will choose search terms for which Google will offer ads; they will determine the number and the placements of ads sold by Google and mix them with some of the ads they sell.

At this time, everything is still somewhat speculation because it is all still in negotiation and has not been approved. However, this is the current outline of how the deal would work between the two search engines. Should the deal take place, nothing will change until September; and if the search phrases in your campaign are fairly competitive, your ads will not be affected by the partnership. Additionally, it seems as though even if you have an ad which would be affected, that your deal with Yahoo! would not be altered. This is all of the information currently available to us, but we will continue to keep you updated on this news as we receive additional information.

To find out more information on how this possible merge may affect your company contact JoAnna Dettmann at tSunela.

JoAnna Dettmann
p. 314.721.8813
e. joanna@tSunela.com

Articles referenced:
New York Times: Ad Accord for Yahoo and Google
CNN Technology: Yahoo! partners with Google