Microsoft Corp and Yahoo Inc Search Alliance: On 29 July, 2009, Microsoft Corp and Yahoo Inc sealed a 10-year Web search deal to better compete against market leader Google Inc. The long-expected deal means Microsoft’s new Bing search engine will be combined with Yahoo’s experience attracting advertisers in the first serious threat to Google Inc — if the companies get regulatory approval and can make the partnership work.
Here’s how the Yahoo-Microsoft deal will work out:
* Microsoft will guarantee the revenue per search for Yahoo’s owned and operated sites in each country for the first 18 months after initial implementation in that country.
* Yahoo expects the agreement to boost annual GAAP operating income by about $500 million within two years and help capital expenditure savings by about $200 million. Yahoo also expects the partnership to add about $275 million to annual operating cash flow.
* Microsoft will pay Yahoo through a revenue-sharing agreement on traffic generated on Yahoo’s network of both owned and operated and affiliate sites.
* Microsoft will pay traffic acquisition costs to Yahoo at an initial rate of 88 percent of search revenue generated on Yahoo’s owned and operated sites for the first five years.
* Yahoo will act as the global sales force for both companies’ premium search advertisers.
* Microsoft’s AdCenter platform will fulfill self-serve advertising for both companies.
* AdCenter’s automated auction process will set prices for all search ads.
* Each company will keep its own separate display advertising business and sales force.
* Under a 10-year license, Microsoft will be able to integrate Yahoo’s core search technologies into its current Web search platforms.
* Microsoft’s Bing will be the exclusive algorithmic search and paid search platform for Yahoo sites. Yahoo will continue to use its technology and data in other areas of its business, including display advertising technology.
* Yahoo will innovate and “own” the user experience on its own properties, including the user experience for search, even though it will be powered by Microsoft technology.
* The agreement restricts the use of search data shared between the companies. To protect consumer privacy, it will limit the data shared between the companies to the minimum necessary to operate and improve the combined search platform.
* Yahoo! will continue to syndicate its current search affiliate partnerships.
* The companies will continue to compete in other areas as the agreement does not cover each company’s Web properties and products, email, instant messaging or display advertising.
Job cuts at Yahoo
Carol Bartz, CEO, Yahoo, said the deal will result in “redundancies” in Yahoo’s staff, although she declined to be specific.
She stressed any changes would not occur until after full implementation of the partnership.
Also, many Yahoo search engineers will be asked to take jobs at Microsoft, whose Redmond, Washington headquarters is far removed from Yahoo’s California homebase.
“There are risks on both sides. Big deals like this tend not to work out. It’s a long-term deal that’s going to take a long time to implement,” said Ryan Jacob, chief investment officer of Jacob Asset Management, the $40 million fund holds some Yahoo shares. “It’s better than no deal.”
And unlike previous discussions which involved an outright acquisition of Yahoo by Microsoft, this deal will create a number of uncertainties for both companies as they fuse disparate technologies, cultures and business priorities. Yankee analyst Carl Howe said integrating two separate search engines is an inherently thorny process that requires merging vast and often incompatible indices of Web data.
Microsoft and Yahoo still face antitrust and privacy issues. Google dropped a planned search partnership with Yahoo last year under pressure from the US Justice Department. The partnership poses only a theoretical challenge to Google at present. It could take two-and-a-half years to get approval and be fully implemented, according to Yahoo CEO Bartz, which would mean the partnership would not be fully effective until early 2012.
Source: Times of india
Search Alliance Testing:
In mid-July, we began testing the delivery of organic results from Bing to Yahoo! Search, which may gradually increase to up to 25% of Yahoo! Search traffic. We also began testing the delivery of paid search results from Microsoft Advertising adCenter to Yahoo! Search, which began with a small percentage of traffic and may increase to include up to 2.5% to 3.5% of live Yahoo! Search traffic in the U.S. Please note that testing volumes will fluctuate during this period. Since the traffic percentages are small, advertisers should not draw any conclusions from what they observe during these tests, as the results may not be indicative of the future marketplace with full Yahoo! volume.
Recent announcement by Yahoo! for Search alliance (Aug/2010):
Microsoft-Yahoo! Search Alliance continues to progress, and in a post on the Yahoo! Search Marketing blog, it looks like the organic part of transitioning is on the verge of completion. Here are few updates:
adCenter account creation
Yahoo advertisers will soon either have to create a new adCenter account or link their Yahoo account to an existing adCenter account. Later this month, Yahoo advertisers will see an “adCenter” tab in their Yahoo Search Marketing account. This will take advertisers to the beginning of the account transition process where they’ll be walked through the steps.
Once the adcenter account is setup then one can manage both accounts from single panel and budget will be distributes amoung pre-existing Yahoo! search marketing account and adcenter so one has to plan budget wisely.
You need to download Silverlight for Microsoft adcenter.
Organic search transition between Yahoo! and Bing
Yahoo! and Microsoft are working very closely for succesfuly transition of organic and paid search alliance. Organic search alliance will be in place by last week of August. Yahoo! will email a confirmation to advertisers once the adCenter tab becomes available and the organic search transition is complete.
New editorial guidelines to take effect in August
There have been numerous questions from advertisers and everyone would like to understand what is going to happen. To put an end to all these discussion, Yahoo! and Microsoft have created joint editorial guidelines that will begin taking effect for both Yahoo! and Microsoft paid search advertisers in August. Please visit, http://advertising.yahoo.com/transition/en_US/editorial_guidelines for further information