Companies in trouble oft nowadays look for ways to outsource key areas of production to streamline costs and raise much-needed cash. So "why not outsource your search advertising to your biggest competitor?" must have been what Yahoo was thinking when it woke up this morning, and after a wild ride today, that’s exactly what the company announced. Google, Yahoo strike ad deal!
After earlier in the day formally announcing their walking-away from any past or future deals with rival suitor Microsoft, Yahoo announced the news that a Google partnership has been met, reviving the stalled agreement and ushering in a new era in search marketing.
Or, not quite… Both companies agreed to "delay implementing the deal for up to three and a half months while regulators review it." There is also a $250 million penalty if the deal doesn’t go through, and you can’t factor out Carl Icann and his continuing bid to replace Yahoo! CEO and co-founder Jerry Yang, as well as the entire Yahoo Board of Directors, and then push through that deal with Microsoft we still slightly remember.
The deal only affects US and Canadian markets, so for those hoping to expand your Mexican search advertising mix you will unfortunately have to wait. The deal does bring Yahoo some much needed cash "Yahoo expects the deal, which has a 10-year term, to generate US$250 million to $450 million in operating cash flow during the first 12 months." It also, at least in the short-term, gives search marketers like myself additional easy access to a larger target market, and hopefully at a reasonably-priced advantage from the old separate-campaign method.
But they both feel like short-term advantages. Google becomes a larger monolith, to be sure. As Aaron Wall points out, this "gives Google another opportunity to spy on web users who use their largest competitor, allowing Google to get a better view of the average web user and making it easier for Google to clone and beat Yahoo! in any market where Yahoo! leads." Part of me wants to laugh at Yahoo’s dire predicament, but the prospect of Google being the sole source of search information and advertising, without any true competition, is a bit unsettling.
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p class=”MsoNormal”>Of course, our marketing team holds the highest Google Adwords certification! And although we all here share a fear of monoliths, (and monorails also, surprisingly) we all agree that Google has produced the best, most effective, search service yet seen. Whether we have a choice in the matter, we will see, but we are definitely willing to take the ride with them into that great big advertising horizon beyond.