Financial Implications of the Yahoo and Microsoft Search Alliance

The analysts in our Predictive Insights unit here at GroupM Search have been busy researching the financial implications the Yahoo and Microsoft Search Alliance will have on advertisers in order to help our clients prepare for the upcoming transition.  The study revealed cost-per-click implications and how increased competition will impact CPCs as paid search advertisers move to one platform. Our analysts also identified a window of volatility advertisers will experience post-transition before the marketplace settles.  Below is our press release on the topic; you may also download the white paper for a deeper look into the study.

Advertisers could see a cost-per-click (CPC) increase up to 78 percent above current Bing CPCs as a surge of competitors move to one platform with the Yahoo and Microsoft Search Alliance transition, a study completed by GroupM Search revealed.

Based on the impact two industry milestones had on advertisers – Yahoo’s introduction in 2007 of Panama and Microsoft’s transition in 2009 from MSN Live to Bing, GroupM Search projects a three-week period of volatility post-transition before costs begin to settle. At the campaign level, advertisers can expect an average increase of 64 percent over current Bing CPCs for unbranded keywords and 78-percent for branded keywords during this time. Once the marketplace settles, CPCs on Bing will rest at 13 to 23 percent above current Bing CPCs for unbranded and branded keywords, respectively.

“Any time you interject change into the auction you invite pricing pressure,” said Chris Copeland, chief executive officer of GroupM Search. “In this case, we see historical evidence that suggests regardless of the bid tools and the preparation, a period of short-term volatility will exist.”

The study was completed by GroupM Search’s Predictive Insights unit, a team comprised of econometric statisticians and mathematicians with expertise cultivated in the area of search marketing. GroupM Search looked at current and historical paid search campaign data to estimate cost implications and how long it will take advertisers to return to equilibrium after this shock to the market. The study included campaign data of 12 market-leading clients who have maintained a steady presence on both Yahoo and Microsoft’s search networks dating back to 2007.

The insights from this study are important for advertisers because it allows advanced preparation for what to expect from this transition.

“If three-week volatility and CPC increases can be countered through better understanding of competitive sets, sophistication of those advertisers and what strategies they use today, then this research will have served our client base well,” said Copeland.

One of the most important insights from the study is the understanding of the number of advertisers with paid search campaigns unique to Yahoo that potentially will now be running on the Microsoft adCenter platform. Within the search marketing campaigns analyzed, on average only 27 percent of the advertisers’ competition for branded and unbranded keywords were running on both Yahoo and Bing. GroupM Search projects that advertisers unique to Yahoo moving to adCenter could lead to a 74-percent increase in competition levels on Bing than exist at present.

This increased competition will be the greatest factor for the amplification in paid search costs, the study revealed. In a pay-per-click auction system, such as paid search, the number of competitors matters greatly in the final price of the item because each competitor vies for its desired position.

“The industry has long known the variances of performance between Yahoo and Bing. What we found and what we believe has the biggest material impact for advertisers are the vastly different competitive sets between the two,” said Copeland. “When you put such a large set of new advertisers of varying sophistication into the mix, you are going to see a less stable CPC marketplace.”

On the heels of the Yahoo and Microsoft Search Alliance transition, however, comes the peak of the holiday season when paid search sees its greatest surge in advertisers and CPCs. With this unique timing, the marketplace could experience bidding variables it hasn’t seen before and it could be early 2011 before everything settles and the “new CPC” is realized.

Copeland added, “It is essential for all parties to get this right and we support the decision to go forward ahead of the 2010 holiday season. However, this predicted fluctuation, combined with holiday bidding strategies, means it could be three to four months before the new normal is set.”

Yahoo SERP delivering Bing's organic results

The Yahoo! and Microsoft Search Alliance announced that Yahoo’s organic search results (English language in the U.S. and Canada) have switched over and are now being powered by Bing – the latest step in their combined battle with Google.  The first question that marketers should ask is, “How will this affect me?”  The answer to that will depend on a number of factors, not least how you currently rank on Bing versus Yahoo. Add the positive or negative swing you may see in traffic for Yahoo in the coming month, and another question many marketers will be asking — given the increase in market share for Bing-powered results, is, “Should I change my website optimization to cater more to Bing?”  The short answer is – no.

Trust the Data
Website owners should review their search analytics and ranking reports to ascertain if they are having success in Google for the keyword phrases they are targeting.  If the website is already ranked more highly on Google than on Bing or Yahoo and Google is driving substantial traffic to your site, you wouldn’t dream of changing that. As such, it is not in your best interest to re-optimize your website to suit Bing over a market share that is under half that of Google.  If the website was previously only having success on Yahoo and all of your traffic was coming from there, then it is likely that you were in need of some further search engine optimization (SEO) for Google and Bing in the first place.

How will it work?
While Bing’s results will be powering Yahoo, both websites will deliver their results differently – it is understood that 22 of the 24 factors that make up a Yahoo results page will still be controlled by Yahoo. As an example, Bing currently provides their “quick access” data and “share” capabilities in some results, while Yahoo will be taking the underlying organic results and delivering them with a Yahoo-twist. This may include any number of extra features such as extra imagery or a NASDAQ ticker symbol, as well as their own related searches and search suggestions, rather than Bing’s.

Remember that once Yahoo has the data from Bing, they can do with it what they will – adding sources to enrich the results based on what they know about you, your searching preferences and the preferences of Yahoo users at large for similar queries. Don’t expect their organic results to look exactly the same as the Bing results just because they came from the same original index.  Likewise, Bing layers on extra data, too, so the information that is sent to Yahoo is not exactly the same as information displayed on their results pages.

What does this mean? Does It Matter?
This is a big step for both Microsoft and Yahoo, and gives Bing a far wider audience to entertain with its vastly-improved search results.  Their combined market share (5.2 billion monthly searches – 31.6 percent of the U.S. market and 8.6 percent of the Canadian market) means that website owners should start to take more notice of Bing, although they remain strides behind Google in market share.

Depending on how a website previously ranked on Bing or Yahoo, you may see a substantial gain or loss of search traffic in the coming month.  As with all things organic, we shouldn’t make any knee-jerk decisions on optimization, but a good understanding of your existing rankings and traffic across both Yahoo and Bing will help to predict how the coming month is going to affect your business.  If you currently rank higher on Bing than you do on Yahoo for your desired keyword phrases, then you are in good shape and should see increased traffic as the Bing search volumes explode.  If, however, you are not well ranked on Bing and yet are on Yahoo, you should expect to see the converse – traffic is likely to drop significantly and expectations on results should be managed.  For those in this situation, this begs the question, “How do I improve my ranking on Bing?”

While Bing’s new-found market share could be considered an opportunity from an SEO perspective, webmasters and marketers should think carefully before plowing in with changes.  For example, longer URLs appear to be detrimental for Bing, but a lot less of an issue for Google. Therefore, it may not be worth the risk of changing your URLs to accommodate this optimization consideration and risk losing credibility with Google (or Bing) in the short to medium term.

If you are building a new website, then naturally you will want to avoid any of the penalties (negative commonalities) that Bing may factor in on top of Google’s. However, overall, the message is that the ranking factors in the algorithms of Google and Bing are not terribly dissimilar and are generally growing closer, so if you are optimizing for one, you are likely heading in the right direction for the other.

What’s a webmaster to do?
The webmaster tools at Bing and Google can help you to identify any issues that are preventing your website from being indexed and, in some cases, from ranking well.  As for your search engine optimization strategy in the wake of the Search Alliance, the best option for most websites will be to prioritize Google optimization, which continues to dominate query volume and also features a good number of the ranking factors that Bing is utilizing, rather than dramatically altering your SEO strategy to suit Bing.

Steve Hall is Sr. Partner and Director of Organic Search for GroupM Search and Outrider North America.

Over the past few weeks representatives from Yahoo and Bing have visited search marketing agencies with a series of updates on the transition. These updates include status items such as progress reports, timing and checklists of things to do before the big switch. As these visits were taking place, a formal release was made public with appropriate quotes from each party. With the pending shift less than two months away, the knowns are finally outweighing the unknowns. And that brings me to an important revelation that matters for advertisers today, but may also be significant in the search marketplace for tomorrow.

Yahoo and Microsoft are listening to advertisers and their agencies. In this business it is common practice to hear what advertisers have to say, but then listen to consumers. Google built its highly successful search business by putting nothing above the consumer experience and providing the highest relevance possible to those individuals who use the service. This has created consistent friction with advertisers, who want to find a more productive way into the process than just cutting a check to show up when Google decides it best for the end user. Unfortunately for advertisers, while the Google model has been successful, historically it has not produced the kind of game-changing innovation in ad formats or opportunities that get advertisers to make dramatic shifts in how they allocate budgets or think about a channel.

With this new search alliance it has been interesting to witness the openness to ideas from both sides in how best to sell and then to package solutions out of two similar, yet distinct, systems. The biggest win for clients is the news that Rich Ads in Search (RAIS), a Yahoo creation, will be available as part of the Search Alliance. Originally neither party was comfortable committing to any inclusion for the program. As it stands today, RAIS will be on Yahoo and efforts are being made to attempt to bring the offering to Bing at some point, if not in the initial phase of the alliance transition. The pricing model for the product itself isn’t perfect, but innovation is a rare commodity in search ads — and for this product to be available is a big deal.

Additionally, the powers that be have worked hard on smaller, more tactical details to ensure that whether it’s the optimizing or the shaping of a buy, advertisers can get some of the best of either world. Areas of investment include:

1.  The ability to apply 1,000s of negative keywords at the campaign and ad group levels.

2.  Control over search and content distribution by choosing:

a) Only Yahoo/Microsoft owned and operated properties;

b) Only Yahoo/Microsoft partners; or

c) All Yahoo/Microsoft owned and operated properties plus partner sites.

Additionally, advertisers will be able to do domain blocking for both search and content.

3.  A complete shift to the Bing match types using the standard exact, phrase and broad matching technology.

4.  Yahoo Canonicalization will be going away completely.

There are additional advertiser and agency issues still needing to be addressed, including daily budgeting concerns based on Bing historical behavior, and the inability to buy Bing and Yahoo as two distinct networks. However, at least for now, the signs show us that Bing and Yahoo are not only taking the business of the alliance seriously, they are taking the business of their advertisers seriously as well.

This article was written by Chris Copeland, CEO, GroupM Search – The Americas, and published on MediaPost’s Search Insider, Friday, July 23, 2010. Follow Chris on Twitter – @SearchBoss.

“The user interface on Google has changed very little since its inception,
and I think it’s their core vulnerability.”
- Irwin Gotlieb, Global CEO, GroupM

Irwin Gotlieb was quoted in an article for India’s The Economic Times discussing the future competition that would challenge Google’s dominance. Gotlieb suggested that the challenge was likely to come from an unknown in a garage somewhere; he doubted the it be on the algorithm front but rather the user-experience side.

The timing of this article had a fabulous intersection for what was one of the most memorable sporting days in U.S.-England history. Simultaneously, the USA and England soccer (futbol, if prefer) teams were playing for their lives in the World Cup. England carried through with a 1-0 win over Slovenia only to see their pesky afterthought competitors from the U.S. score a stoppage time goal from Landon Donovan to win the Group over England.

As remarkable as the U.S. outcome was, it was not even close to the most amazing U.S.-England sports outcome of the day – and an interesting example of how the commentary about Google’s blind spot could eventually be exposed.

Just as the U.S. and England matches were winding down, a buzz started among some of the sports-specific Twitter accounts I follow about a first-round tennis match at Wimbledon between American John Isner and Nicolas Mahut of France.

The match started Tuesday and was called overnight at two sets apiece. It resumed on Wednesday, and when the buzz picked up, it was, at that time, tied in the fifth set at 30-30. The match was bordering on records for duration and games played at Wimbledon and steaming toward Open Era tennis records. By the time it was over, the fifth and final set qualified as the longest match on its own. The original record for longest match in the open era was just over six-and-a-half hours. This one? It went close to 10 hours!

So, where does Google fit into this? The answer today is nowhere. I use Google and Bing frequently every day. Yet even when I was searching for Wimbledon to shortcut to the live results from the Official Site, I would have had no idea this epic tennis match was taking place. The Google score tracker on the result page failed to possess the AI to discern history in the making. Even a portal like Yahoo didn’t register the history.

Then again, country singer Kellie Pickler (who got engaged) was out-trending Landon Donovan who won the game for the U.S. soccer team, so make of that what you will.

My point, as it relates to search evolution, is that we have to examine what we know (expressed intent) and how we see that delivered to the benefit of users. A few weeks back, Google launched background images on the home page. Not a new idea; Bing has used it since launching last year. Yet, the public expectation of what Google should look like led to a swift removal — the outcry was strong against the change.

In the past, Google and others have tried to incorporate the searches and feedbacks of others, but the general public seemed uninterested. My passion for sports is an expressed behavior. When I get behaviorally targeted ads, they usually involve sports or Vegas. If Google is truly, as John Battelle once contended, the keeper of the database of intention, then they have to gain public blessing to do something with it. Right now, the public is withholding — and their core business is not equipped to capture on it alone.

If change is to come, then perhaps it has to come from someplace new.

If the contract of agreement between users and Google has long since been written, then re-writing that is a daunting task. Likewise, while Twitter and even Facebook have allowed me to become informed of my friends and topics of interest, they are still woefully ill-equipped to respond with advertising that is tangential to my previously-expressed intentions.

Perhaps it’s Apple which has changed the user interface through their devices, specifically the mobile and now tablet devices. Or maybe, as Gotlieb suggested, it will be someone else, in a garage, that writes the contract with users that compiles intent data, like Google, and marries it with a unique experience, like Apple or Facebook. The trick is to do it in such a way that brings more brands into the discovery phase, so when consumers express previous intent, it can benefit them at any time.

As for the tennis match, for a second straight day, it descended and play was suspended, this time at 59-59 in the fifth set. Much like the user interface of the future, still undecided.

This article was written by Chris Copeland, CEO, GroupM Search – The Americas, and published on MediaPost’s Search Insider , Friday, June 25, 2010. Follow Chris on Twitter – @SearchBoss

In preparation for this column, I asked the head of my research team at GroupM Search to find a few data points about the difference between true search engines and places where people can search, in addition to other things. The subject line for his reply was “Top ‘Search’ Properties.” His reply provided some of the data I’ll cover in this column, but it also highlighted a major challenge we are now facing in the search space.

Consumers express their intention throughout the digital graph, and our ability to position brands as a proper response is the key to success for advertisers. Today we focus on how much share of voice we can buy in traditional search locations. Every year, studies come out showing the lack of success major brands have in the SEO realm. This bodes ill if they are to take the premise of this column forward into their business. Because whether you consider YouTube or Facebook a “search” property or not, the reality is consumers’ expression of intent is being facilitated through searching and selection on every major site from FourSquare to Twitter to Digg.

The brand opportunity is no longer determining how a brand lives and is found through the sole volume of Google or the full search engine landscape. Rather, the opportunity for brands exists in a broader, more complex group of sites with vastly different approaches to optimization and exposure. Take a look at the chart below from comScore for top “search” properties, noting the volume on sites beyond the Big Three engines:

Observers might not question the volume, but they could certainly question the worth of queries coming from some of these locations.

In essence, what we are facing in search marketing is a challenge of users expressing intent off search engines and, as such, a murky understanding of just how valuable and strong that intent is. Should we devote more time to YouTube since it outpaces Bing and Yahoo in searches done? Or does YouTube simply contain far more searching for fuzzy kittens and queries void of deep interest to the consumer and advertisers alike?

Even so, if nontraditional venues are garnering more attention and inherently building search into the mix, it changes a great deal for us. Take a recent string of queries from a B2B client around search. For years this client has focused its paid efforts on maneuvering around the category leader. In some cases this involved always being on when the No. 1 player was present, and in other cases it meant looking for specific opportunities to buy when competition didn’t exist to differentiate. Now the client is asking about optimizing documents created for the Amazon Kindle store to show up in a prominent location when general searches were taking place.

Additionally, the client’s content manifests itself in extensions of traditional brand campaigns complete with white papers, videos and even content disseminated to third party sites. In each of these cases, presence is a guarantee of nothing. Being there does not equal being found, and as such, an extension of SEO continues to manifest itself. Over the past year we have seen a stark shift where optimizing assets for non-traditional search experiences has moved from being a subset of SEO to being a category of solutions of which SEO is a part.

We call our approach “Owned Media Management,” a process to properly assess, develop, align, optimize and distribute brand-owned elements (video, images, text, press, website) to wherever consumers are searching. Over the past two years I’ve heard both Kevin Lee and Gord Hotchkiss speak about Google as a verb and the challenges that come with the ubiquitous nature of search and association to the dominant player. But for all of that talk – and there is a lot of truth to what they’ve said – the challenge facing marketers is much broader than just Google and it is happening less and less on the desktop and on a search engine.

The brands that invest in Owned Media Management will be the ones that get out ahead of this and enjoy the same advantages that some brands experienced in paid search circa 2005 and before. Because where audiences search and how we classify those sites matter far less than connecting that intent with your content in the moment.

In preparation for this column, I asked the head of my research team at GroupM Search to find a few data points about the difference between true search engines and places where people can search, in addition to other things. The subject line for his reply was “Top ‘Search’ Properties.” His reply provided some of the data I’ll cover in this column, but it also highlighted a major challenge we are now facing in the search space.

Consumers express their intention throughout the digital graph, and our ability to position brands as a proper response is the key to success for advertisers. Today we focus on how much share of voice we can buy in traditional search locations. Every year, studies come out showing the lack of success major brands have in the SEO realm. This bodes ill if they are to take the premise of this column forward into their business. Because whether you consider YouTube or Facebook a “search” property or not, the reality is consumers’ expression of intent is being facilitated through searching and selection on every major site from FourSquare to Twitter to Digg.

The brand opportunity is no longer determining how a brand lives and is found through the sole volume of Google or the full search engine landscape. Rather, the opportunity for brands exists in a broader, more complex group of sites with vastly different approaches to optimization and exposure. Take a look at the chart below from comScore for top “search” properties, noting the volume on sites beyond the Big Three engines:

Observers might not question the volume, but they could certainly question the worth of queries coming from some of these locations.

In essence, what we are facing in search marketing is a challenge of users expressing intent off search engines and, as such, a murky understanding of just how valuable and strong that intent is. Should we devote more time to YouTube since it outpaces Bing and Yahoo in searches done? Or does YouTube simply contain far more searching for fuzzy kittens and queries void of deep interest to the consumer and advertisers alike?

Even so, if nontraditional venues are garnering more attention and inherently building search into the mix, it changes a great deal for us. Take a recent string of queries from a B2B client around search. For years this client has focused its paid efforts on maneuvering around the category leader. In some cases this involved always being on when the No. 1 player was present, and in other cases it meant looking for specific opportunities to buy when competition didn’t exist to differentiate. Now the client is asking about optimizing documents created for the Amazon Kindle store to show up in a prominent location when general searches were taking place.

Additionally, the client’s content manifests itself in extensions of traditional brand campaigns complete with white papers, videos and even content disseminated to third party sites. In each of these cases, presence is a guarantee of nothing. Being there does not equal being found, and as such, an extension of SEO continues to manifest itself. Over the past year we have seen a stark shift where optimizing assets for non-traditional search experiences has moved from being a subset of SEO to being a category of solutions of which SEO is a part.

We call our approach “Owned Media Management,” a process to properly assess, develop, align, optimize and distribute brand-owned elements (video, images, text, press, website) to wherever consumers are searching. Over the past two years I’ve heard both Kevin Lee and Gord Hotchkiss speak about Google as a verb and the challenges that come with the ubiquitous nature of search and association to the dominant player. But for all of that talk – and there is a lot of truth to what they’ve said – the challenge facing marketers is much broader than just Google and it is happening less and less on the desktop and on a search engine.

The brands that invest in Owned Media Management will be the ones that get out ahead of this and enjoy the same advantages that some brands experienced in paid search circa 2005 and before. Because where audiences search and how we classify those sites matter far less than connecting that intent with your content in the moment.

This news is disappointing in terms of the opportunities Cashback presents for advertisers and the needed differentiation a program like Cashback brings for an engine to be competitive in the marketplace. On the heels of Yahoo’s end of the Paid Inclusion program at the start of 2010, this is now two key variants in the marketplace gone from challengers to Google.

Cashback was introduced as a differentiator for Bing when it launched and took significant work on the part of their advertisers and agency partners to implement. Advertisers who invested in IT developments to support site integration for Cashback’s premium program will surely feel a sense of wasted long-term opportunity. Ultimately, this program felt partial baked upon launch, and with significant changes to the Bing focus and leadership, it is safe to say it never released its full potential and thus went the way of many “differentiating” products brought to the search market.

Products of this nature seem caught in a fatal cycle – brought to market with great effort to get buy in and heralded as a staple in differentiating factors. They are then supported by significant investments in time and resources by advertisers and agency partners, only to be pulled from the marketplace. What’s most disappointing is when these decisions are made without conversations along the way with key parties – leading advertisers, agencies, partner sites, etc. – to discuss what is or isn’t happening with the program and address how to combat a challenge when a product, like Cashback, falls short of meeting objectives.

So what are the implications? This decision by Microsoft raises important questions:

What will happen to cost-per-click and click-through-rates?
Close attention will be paid to CPCs and CTRs when Cashback comes to an end. When the program was announced, paired also with the aggressive nature of the program for eBay, CPCs on Bing increased. The impact on CPCs and CTRs should be monitored and, after a year’s time, also assessed to determine if they will adjust or whether the impact of the Yahoo/Bing Search Alliance will show little or no savings.

Will audience size decrease?
Cashback was designed as a tool to get users interacting with the engine. What happens with those adopters will be critical for Bing and the marketplace. The removal of the program will reveal in the mid-term the true impact Bing has had on consumers at providing value in what they’ve deemed as core: decision making.

What is the impact on campaign stability?
One could argue the elimination of Cashback offers greater stability in managing a search program as we face the imminent Yahoo/Bing Search Alliance with two engines housing drastically diverse environments. Previously, we were informed Cashback would remain on Bing but would not be offered on Yahoo post-Alliance. While Microsoft contends that Yahoo is not applying pressure to end the Cashback program, they do note that it would be difficult from a technical perspective to maintain the program in a unified marketplace with a common technology structure. That said, Yahoo and Bing have an essential task ahead of them to develop reliable programs and tools that mutually benefit their growth in share and deliver value for their advertisers.

There is discussion around the development of a similar program to incent users after the Search Alliance is complete. This is a tough proposition. While Microsoft has significant depth of resources and the potential to be successful in this endeavor, many search players, such as iWon, have tried unsuccessfully to devise incentive-based programs and increase share. The challenge Microsoft now faces with Bing, however, is bigger than an incentive program to attract users and advertisers. It is creating differentiation and product advancement that is critical for the industry and necessary to continue increasing market share.  Our disappointment with the lack of ongoing communication around Cashback heightens our interest in greater scrutiny when evaluating future opportunities and creates an expectation for greater communication in regards to the overall health of a program.

While the decision to end the program may have come down to the financial support model created by Microsoft, one cannot help but wonder if the decision was made premature to trying to allow this program to stand on its own. When Microsoft began this program they were adamant this was a “rabbit hole” they didn’t feel Google could or would chase them down; yet, here we find ourselves with clear indication as to why that is. While Bing is showing nice gains (up 3.4% market share since launch), this move leaves their core product more and more Google like; and that lack of differentiation is not a positive for Bing or the marketplace at large.

Some are born great, some achieve greatness, and some have greatness thrust upon them — Shakespeare, “Twelfth Night”

I’ve spent most of the last month engaged in a knowledge quest to better anticipate the direction major players in search and social media are planning to take in the coming 12 months. The tour kicked off in Redmond, Wash. with Microsoft and concluded last week with a visit by Yahoo CEO Carol Bartz to discuss the current and future state of Yahoo with the GroupM Search leadership. It’s probably no accident that the bookends of this process are two players in the space who are banking on greatness coming from the combined power they bring to the marketplace.

What was clear to me after these discussions is that these companies have a shared plan on the path forward, as well as divergent objectives and strategies for their own properties. What’s not as clear is whether these companies are setting out to achieve greatness or rather hoping that they can bottle the lightning and have it thrust upon them.

The Yahoo/Microsoft deal moves the market needle up for Microsoft from its own level. That helps relevancy from an algorithm point of view, but what about allowing advertisers to improve relevancy directly?

For years I’ve howled at the moon over third-party ad serving in search. If the end goal of relevancy is to give users the best connection to their expressed intent, then allowing advertisers to stop advertising when people don’t click on them time after time, or switching up creative based on inactivity on the brand listing would be an improvement, right? We continue to gravitate toward a single platform that will ultimately allow advertisers to buy search and display. So, if you are Microsoft, why not provide more intelligent and valuable solutions for advertisers in this area?

That being said, there’s one piece of this deal that I continue to hear little about. Today, advertisers buy two distinct marketplaces. At the conclusion of this deal, advertisers will suddenly buy Yahoo and Bing as one: same bid, same creative, single view of keyword-level reporting. Most advertisers know that these marketplaces behave quite differently. A recently released SEMPO study of the search industry detailed that barely 50% of all advertisers surveyed are buying Yahoo, and fewer still buy Bing; therefore, you need to simplify and engage the masses better. Still, when you attempt to increase the supply of advertisers and force the existing ones to blend their bidding, the likely outcome is a cost increase, which threatens to pale the impact experienced today when you buy a single answer via Google.

Compounding this is the present decision of Yahoo not to migrate Bing Cashback into their offering. One of the few areas where Bing has really distinguished itself in year one is in this area. Advertisers who today message and bid based on their variable Cashback offers now must do so knowing that a vastly larger portion of the market share will not be afforded the benefit of the listing; and the price value being made is done without full value being returned from Yahoo. I sense a desire to study and get deeper on this from Yahoo, but a program that comes to market without this is a hole in the results page.

Speaking of which, nothing surprised me more than the statement from Yahoo that the Bing algo and paid content represents only two of 24 elements that go into creating a results page. Yahoo has kept and continues to work around the fringe on innovation to the format and construction of this experience.

What will be interesting is to see where and how Yahoo tries to create value for its audience to stem the tide of market share losses seen in the last few months. Spend any time with Yahoo at a high level and you’ll find a strong commitment to a unique experience around search, including beyond just what gets ported over from Bing. This is crucial for market share growth.

More importantly long term than giving up search technology for Yahoo is its decision to get away from toolbar distribution deals. These deals have dramatic sway over search share and Microsoft is more than willing to buy ahead of organic growth. For Yahoo to keep its base it has to evolve, and there are signs, mostly verbal at this stage, of doing that.

On both sides of the fence, Yahoo and Microsoft have much to gain, and lose, in the coming months. Advertisers have warranted concerns about technology and transitions and the players have to keep pace with Google while trying to be integrated.

But those are table stakes for this game. People like to suggest that search is in its early innings; and while that may be true, this is no excuse not to compete from the outset. If the goal is to be in the game and to be viable as another choice, then the industry is about to settle for good. This is no time or place for the faint of heart — and fortunately for Yahoo, that’s not a phrase you’d ever associate with Bartz. Harry Gray, former chairman of Mott Corp, once said, “No one ever achieved greatness by playing it safe.” Now is your time, Yahoo and Microsoft. Be bold, be great.

This weekend, the Colts and Saints will battle to determine the king of the football hill during Super Bowl XLIV. A month into 2010, there are battle lines across the search landscape that also bear watching. These battles will shape the devices, platforms and consumer experience for this year and many to come. Here’s your quick primer of the battles, the stakes and what to watch for to determine who has the upper hand.

DOJ vs. Insert Big Digital Player Name Here

Right now the Department of Justice is reviewing, among other things, both the Yahoo and Bing search partnership and the Google acquisition of AdMob in the mobile space. As the Internet continues to fragment at its edges, the core players continue to grow stronger and stronger. Everyone knows the dominance Google has in search; now the company wants it in display and may have bought it in mobile. At this point the DOJ has an enormous challenge to determine if either of these deals end broader competition in the marketplace. 

Yahoo/Bing vs. Market Share

If you assume for a second that the Yahoo + Bing marriage is going to happen, then the question is, what does it mean for advertisers and the marketplace. That answer ultimately boils down to market share gains. Right now, Yahoo is doing its best to sell any valuable assets (with HotJobs joining the list of sold assets) and retain destination status. The news on the search share front has been mixed with regards to this partnership. Yahoo’s losses have translated into Bing’s gains. Clearly, the new Bing is better than the last iteration of Microsoft Live Search, but what does Act 2 look like? We are approaching the year mark for Bing, and we’ve yet to see anything major on the ad side with formats or features. Bing’s minimal variants from Google aren’t taking traffic from the dominant #1 player in the space.

Google vs. Apple

Most expect that even with the Yahoo-Microsoft mash-up, attention will be focused on integration, and that innovation will suffer. Well, prevailing wisdom had been that Google could innovate its heart out and expand the desktop search lead. Then along came the Nexus One and a firestorm of trash talk between the powers that be at Apple and Google about what their devices are and the others are not. Suddenly, one can’t help but wonder if Google’s about to go start a Holy War for the “Cool Kids” crown with Apple, while leaving the store unmanned. Google’s trick in search advertising has been a good one, but it has yet to capture the imagination around social, mobile or even technology the way other digital pioneers have. I have to think this is a mountain the company longs to conquer, but at what cost?

Social/Real-Time Search vs. The Hype

You can’t read a blog or newsletter on the search or social space without your head exploding from all the pontification about the potential of social search. There’s no doubt that the Google mission for organizing the world’s information gets infinitely harder when you bring immediacy into the equation and the information is Web-based, in micro-formats like status updates from Facebook and tweets.

That being said, the hype about how this will change the world of intent and search as we know it seems out of proportion to the real value it has today. This is an area where I think the hype is at Year of Mobile circa 2007/2008 levels. Someday, people will tell you they were on this bandwagon when it left the station, but will fail to mention they had to sit on that hard wood for a good two years waiting for meaning movement.

And finally, the Super Bowl. Colts and Saints. The best of 2009; two teams that started 13-0 now playing for the Lombardi trophy. The outcome? Too much Peyton, and end score of 38-20 favoring the Colts. If only these other battles were as easy to predict.

How many relatives, co-workers, friends?
How many presents to buy, wrap and send?
Overwhelmed by my tally I began my plight
“How on earth does Santa do it?” I wondered this night.

The store shelves near bare, the pickings were slim
Had I waited too long? Was the outlook now grim?
Back to my home, I flew with resolve
                          Booted up my computer to search, find, and solve.

On Google! On Yahoo! MSN, Bing and Ask!
Find “Last Minute Christmas Deals”, now this is your task!
To the top of the page, to the top of the list
What deals would I find too good to resist?

Digital camera for dad, video games for bro
Coffee maker for mom, a new phone for the beau.
Holiday gift baskets, sent pre-arranged
Desk toys for the Secret Santa Exchange.

No waiting in lines. No fighting the crowds.
“My shopping is done!” I shouted out loud
No wrapping, no packing, no decorating the loot!
Great deals were found, free shipping to boot!

Warm and snug by the fire, sipping my wine
Reflecting on my good fortune, finding gifts so divine
My to do list is done, I’ve nothing left to do
but tweet my good wishes, and share a Facebook photo or two.

For all those like me, who have not yet started
Fulfilling  Christmas wish-lists for their hopeful hearted
Avoid the rush and madness of the Christmas kind
I wish you happy searching and to all a good find!