SEO

Microsoft, Yahoo Search Deal is Official

As expected, the Yahoo-Microsoft search and online advertising deal is now official. In simple terms, the deal is all about Microsoft powering Yahoo search while Yahoo serving as the exclusive worldwide relationship sales force for both companies’ premium search advertisers.

microsoftyahoo Microsoft, Yahoo Search Deal is Official

In other words, or in a simpler than the simple terms – Microsoft is actually using Yahoo’s search market share to become the no.2 search engine. Being no. 2 is certainly better than always being on the third spot of the search engine ranking.

From the words of Yahoo’s Carol Bartz:

“This agreement comes with boatloads of value for Yahoo!, our users, and the industry, and I believe it establishes the foundation for a new era of Internet innovation and development. Users will continue to experience search as a vital part of their Yahoo! experiences and will enjoy increased innovation thanks to the scale and resources this deal provides. Advertisers will also benefit from scale and enjoy greater ease of use and efficiencies working with a single platform and sales team for premium advertisers. Finally, this deal will help us increase our investments in priority areas in winning audience properties, display advertising capabilities and mobile experiences.”

And Microsoft’s Steve Ballmer has this to say about the deal:

“Through this agreement with Yahoo!, we will create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company. Success in search requires both innovation and scale. With our new Bing search platform, we’ve created breakthrough innovation and features. This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness. Microsoft and Yahoo! know there’s so much more that search could be. This agreement gives us the scale and resources to create the future of search.”

The key points of the Microsoft – Yahoo Search and Online Ad Deal:

  • The term of the agreement is 10 years;
  • Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies, and Microsoft will have the ability to integrate Yahoo! search technologies into its existing 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 such as enhancing display advertising technology;
  • Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform, and prices for all search ads will continue to be set by AdCenter’s automated auction process;
  • Each company will maintain its own separate display advertising business and sales force;
  • Yahoo! will innovate and “own” the user experience on Yahoo! properties, including the user experience for search, even though it will be powered by Microsoft technology;
  • Microsoft will compensate Yahoo! through a revenue sharing agreement on traffic generated on Yahoo!’s network of both owned and operated (O&O) and affiliate sites;
    • Microsoft will pay traffic acquisition costs (TAC) to Yahoo! at an initial rate of 88 percent of search revenue generated on Yahoo!’s O&O sites during the first five years of the agreement; and
    • Yahoo! will continue to syndicate its existing search affiliate partnerships.
  • Microsoft will guarantee Yahoo!’s O&O revenue per search (RPS) in each country for the first 18 months following initial implementation in that country;
  • At full implementation (expected to occur within 24 months following regulatory approval), Yahoo! estimates, based on current levels of revenue and current operating expenses, that this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo! also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million; and
  • The agreement protects consumer privacy by limiting the data shared between the companies to the minimum necessary to operate and improve the combined search platform, and restricts the use of search data shared between the companies. The agreement maintains the industry-leading privacy practices that each company follows today.

The agreement does not cover:

  • Web properties and products,
  • email, instant messaging,
  • display advertising,
  • or any other aspect of the companies’ businesses.

A new website was also established which will discuss the different aspects of the agreement, probably in the days to come.  Check it out at  http://www.choicevalueinnovation.com.

So now we wait for Google’s reaction.

 Microsoft, Yahoo Search Deal is Official
Arnold Zafra writes daily on the announcements by Google, Ask.com, Yahoo & MSN along with how these announcements effect web publishers. He is currently building three niche blogs covering iPad News, Google Android Phones and E-Book Readers.
 Microsoft, Yahoo Search Deal is Official

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7 thoughts on “Microsoft, Yahoo Search Deal is Official

  1. As per revenue concern this deal will be going to good, but their is a chance that yahoo may loose some search user base who love yahoo’s search engine, off course it is very earlier to predict but in long run yahoo search engine may loose it’s weight age

    Let see what will happened is this deal going to be worth while to treat google………

  2. How can this be bad news? It means that Google will actually have some competition, which should inspire innovation from all and give Microsoft the opportunity to really test it’s muscle, something it hasn’t had the search volume to do previously. It’s great news for search marketers and search advertisers both!

    There’s nothing about paid inclusion though. Will it be terminated? SEO will definitely need to be modified, but might it be for the better? Here’s a nice take on how it will affect different aspects of SEM: http://kl.am/1P6m
    .-= Angie´s last blog ..Why MicroHoo Benefits the SEM Industry =-.

  3. I agree that Google could certainly use the competition, however, I can’t help but feel that Yahoo has made a fatal mistake with this agreement. Microsoft is the type of company to take over, rather than partner. Time will tell if the move is good for the Yahoo users as well as the companies involved.
    .-= Sherryd´s last blog ..Review: Answer Analyst =-.