What does Yahoo & Microsoft Bing deal mean for search marketing?

A year and a half after initial deal talks, Microsoft and Yahoo reached a long-awaited partnership last week (7/29).  The term of the agreement is 10 years where Microsoft will acquire the license to Yahoo’s core search technology and integrate into the Bing platform.  Microsoft will pay Yahoo 88% of the revenue it gains from searches on Yahoo’s sites.  On the back-end, Microsoft will be the exclusive algorithmic search (organic) and paid search platform, meaning the Bing technology will power all Yahoo searches.  Microsoft will handle the search support while Yahoo will become the advertising sales team for both entities.   Yahoo and Bing will maintain their brand, but Yahoo searches will be “powered by Bing”.  The deal is expected to close in early 2010 and U.S. users should  start to see the changes three months later while users around the world will see the full effect within two years.

Although it has been announced that scalability is the reason for the deal, it is also meant to compete with Google AdWords.  However, Google is such a big power house that the Yahoo/MSN combination still holds less than half the market share of Google.   The main factor in the deal’s success relies on how Bing’s search technology resonates within the search community.  So far, Bing has marginally increased market share, but mainly stealing Yahoo’s share.  With the ex-competitors soon to be combined, the direct effect on Google’s market share will become evident as the competition ramps up.  All in all, the deal looks to be a benefit for both companies as Microsoft wants to pry internet users away from Google, and Yahoo is interested in focusing on building up its media sites such as finance and sports.

Microsoft and Yahoo reached a partnership agreement on July 29 that concludes a year and a half of deal discussions.  Terms of the deal include:
•    10 year term
•    Microsoft will acquire the license to Yahoo’s core search technology and integrate into the Bing platform.
•    Microsoft will pay Yahoo 88% of the revenue it gains from searches on Yahoo’s sites.
•    On the back-end, Microsoft will be the exclusive algorithmic search (organic) and paid search platform, meaning the Bing technology will power all Yahoo searches.
•    Microsoft will handle the search support while Yahoo will become the advertising sales team for both entities.
•    Yahoo and Bing will maintain their brand, but Yahoo searches will be “powered by Bing”.

The deal is expected to close in early 2010 and U.S. users should start to see the changes three months later while users around the world will see the full effect within two years.

Although it has been announced that scalability is the reason for the deal, it is also meant to compete with Google AdWords.  However, Google is such a big power house that the Yahoo/MSN combination still holds less than half the market share of Google.   The main factor in the deal’s success relies on how Bing’s search technology resonates within the search community.  So far, Bing has marginally increased market share, but mainly stealing Yahoo’s share.  With the ex-competitors soon to be combined, the direct effect on Google’s market share will become evident as the competition ramps up.  All in all, the deal looks to be a benefit for both companies as Microsoft wants to pry internet users away from Google, and Yahoo is interested in focusing on building up its media sites such as finance and sports.

What does this mean for paid search?

The combo beefs up the competition for Google, making each engine continue to push the innovation envelope.  To combat this threat, I would expect to see Google engineers continue tightening up on quality and user experience, offering more beta tests for new products.

Also, two smaller engines turning into one makes it more convenient to manage paid search with more of a scalable solution.  Although the details have not yet been formulated, all MSN & Yahoo search will go through one support team.  Planners will be able to launch paid search campaigns through MSN AdCenter, which has a user-friendly interface similar to AdWords.   However, this is likely to increase ad relevancy, quality, competition, and, effectively, cost per clicks.  There has not been any announcements yet regarding Yahoo’s Paid Inclusion (AKA Yahoo Search Submit Pro), but it is possible that the service could be terminated which will be unfortunate as it is an extremely efficient search tactic for advertisers.

What does this mean for SEO?

Since Bing will be the algorithm for both engines, SEO managers will need to learn and optimize around it.  However, it is possible that the Yahoo’s results ordering, layout, sidebars, and searcher focus may continue to be unique from Bing, requiring that SEOs still pay attention to the differences in the two engines and optimize accordingly.  The deal may also have a substantial impact on the link research landscape if the Yahoo link data is removed.  Since Yahoo owns the largest two providers of link information, there would be very few sources of link information.  Links are the core of search engine attributes, so not knowing how many links one has or competitors has could severely affect SEO and link building.  This could lead to the rise of more proprietary link indicates as well as breaking several tools that use Yahoo for their link data. Also, with Yahoo out of the core search business, I would expect to see them improve their content, making it tougher for sites to compete with Yahoo’s organic rankings.

What to do?

At this time, many of the conclusions of the deal are speculation as most of the details are still yet to be worked out.  Marketers should expect to see incremental changes over the next two years and the deal is completed and should be prepared to adjust their SEM strategies accordingly.

In the meantime, I would treat Bing as if it is the new Google because it could pave the way for future search quality best practices.  SEO Planners should be comfortable with Bing Webmaster Tools to improve optimization efforts.   Either way, this deal will prove to be an exciting change for the search landscape.