Bad News for Advertisers: Yahoo to Serve Google Ads

Recently Yahoo and Google announced a new partnership. Here’s the skinny. Yahoo will serve up Google’s ads on about 80% of their search volume. This move will add about a billion dollars annually to Yahoo in the short term, but in the long term they are going to effectively kill off their search business. This deal really concerns me for several reasons:

  1. Google is becoming a monopoly. Google already has about 65% of the search engine volume. A combination with Yahoo will give them over 90% of the search volume. I’m always a fan of competition over monopolies. This will effectively consolidate Google’s power and dominance. I’ve already mentioned how Google is raking the little guy over the coals. This will only make it worse.
  2. Your costs on Yahoo are going to increase. Guaranteed. Average prices on Yahoo are about a third of what Google’s paid search algorithm is able to achieve. This is where all Yahoo’s new-found cash will be coming from. Straight from your pocket.
  3. There will be less innovation. Yahoo is not known for their innovation in search. But Microsoft is actually innovating. Take their adlab or their excel plug-in for examples of the next generation of tools for advertisers. I believe that a combination with Microsoft would have combined Yahoo’s volume with Microsoft’s innovation. But with this deal there will be no reason to even run a separate Yahoo account. This means no improvements or innovations on their own platform. (Not that they understand how to improve their platform anyway)

Let’s hope that the Department of Justice puts this one to bed before they can execute it or that Microsoft and Carl Icahn go hostile. This deal completely seals Google’s dominance and your dependence on their traffic. Anyone interested in forming a consortium of concerned advertisers?

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1 Comment

  1. Kenneth June 17, 2008

    And the winner is: Google!

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