Microsoft and Yahoo - What Could it Mean for Your Pay Per Click Advertising?

Would a Microsoft acquisition of Yahoo be a good thing for pay per click advertisers and search engine marketing firms? My personal opinion is that a merger between the #2 and #3 paid search platforms should be a good thing for most SEM's and PPC advertisers in the long run.

The primary benefit for search marketing agencies and advertisers is the result will eventually be one less platform to learn and manage. More impressions and clicks in the new "Microhoo" pay per click platform will result in better economy of scale for launching and managing pay per click programs.

Right now, Yahoo Search! and Microsoft AdCenter are considerably more difficult to set-up and manage compared to Google AdWords. Both platforms are significantly behind Google in terms of ease-of-use, tracking and reporting. At the same time, the combined volume for my clients running Yahoo and Microsoft campaigns is typically 1/3 of that for Google AdWords. It takes just as long, if not longer, to launch and manage campaigns on Yahoo Search! and Microsoft AdCenter as Google AdWords, but at significantly lower click volumes.

Despite this drawback with Yahoo! and Microsoft, I still recommended Yahoo Search! and Microsoft adCenter to my clients because the higher conversion rates on those search platforms, in comparison to Google, more than justify the time required to launch and manage paid search campaigns on those platforms.

By combining the pay per click volume of the two search engines, in-house advertising departments and search marketing agencies will be able to lower their overhead costs to launch and manage the same level of clicks. There's also the possibility that the Microsoft and Yahoo! teams will be able to create a paid search platform that rivals or even surpasses that of Google. The potential of a better Microhoo platform, while seemingly slight, will obviously encourage Google to continue improving their already superior pay per click advertising platform.

Of course, there is downside risk to this scenario if Microsoft and Yahoo are not able to effectively integrate their cultures and platforms. Large mergers/acquisitions like this one rarely meet the expectations of shareholders (e.g. AOL and Time Warner). This deal is nearly 7 times larger than any acquisition Microsoft has made previously which increases the risk level for a successful outcome. This leaves us with the potential outcome two or three years down the road where Google is even more dominant that they are today. Admittedly, that would not be the best outcome for online advertisers.

Rob Reed
Terrakon Marketing
Pay Per Click Consulting and Management