With the deal now in place that allows Yahoo! to focus on large advertisers, display advertising, and Yahoo! user properties and experiences, it’s become unclear to many within the analytics industry (okay, at least me) what will become of Yahoo! Web Analytics.
As I understand the intent of the partnership, Yahoo! sees its core competence as servicing large advertisers with advanced products, and creating cool user experiences. Yahoo! wants to focus on those strengths, and does not want to continue investing in products and operations targeted to small and medium sized advertisers.
On the flip side, Microsoft, with its installed base of Office users, sees small business owners (tail advertisers) as its bread and butter. Following SMBs online (where the first step is showing up in search results (SEO) and the next is driving leads with advertising) is the evolutionary next step for Microsoft. Hence, they want to own a search marketplace, and SMB advertiser relationships.
As such, it is now arguably off-strategy for Yahoo! to continue to invest in an analytics product that provides tail and torso advertisers information primarily used for search campaigns. Small(ish) advertisers and their understanding of search is meant to be Microsoft’s area of expertise [even though Yahoo! still benefits through the rev share]. It hasn’t been determined yet how Y! and MS will divvy up the advertiser base – my bet is that the line will be drawn where Yahoo! believes an advertiser is large enough to spend $5-10k/month on display advertising. That is the de-facto min for an advertiser to get started with Yahoo’s MyDisplayAds product. If they are that large, Yahoo! wants to service the account; if not, adCenter can have them.
Regardless, YWA’s search marketing functionality is already considered quite strong and when you view YWA’s full-featured marketing capabilities, the main thing that could still be improved is simply tightening the integration with YSM (and now AdCenter).
Due to Yahoo’s new focus, it is probably safe to say that the YWA team will focus future innovation on the display advertising side, and that is a good thing, since most analytics packages do not do much in the way of tight integration with display advertising campaigns or provide advanced display campaign performance insight (tracking the conversions from banner and video clicks is only a small fraction of the benefit display advertising provides. And counting display campaign interactions is only a fraction of everything a marketer would want to know about the person interacting with the ad, the creative, the context, synergies between campaigns, etc).
Integration with Yahoo’s Display APIs, and even DoubleClick APIs (as Google continues to ‘open’), probably makes a lot of sense. I reported this in a previous post, but advancements in cross-channel attribution is probably still a holy grail for Yahoo!. Where it will get the resources to invest is another question – perhaps MS will help, who knows.
In other YWA news, the YWA team recently announced the launch of the Yahoo! Web Analytics Consultant Network (YWACN) which I was involved in helping to build. It’s a global network of 48 consultants meant to help Yahoo! sell and support YWA, much like the Google Analytics Authorized Consultants. This, fortunately, helps the product stand alone, to some degree.
In short, YWA still has a chance to be “game changing” as Eric Peterson predicted when it first launched as a free product. Yahoo’s organizational and strategic changes over the past year have overshadowed Yahoo! Web Analytics and greatly stifled the buzz that YWA should have created as a game-changing and innovative free enterprise service. Much of it has been ‘behind the scenes’ but a whole lot of progress was made in its first year (May 2008 – July 2009) by the small but dedicated and talented team I had the pleasure to work with at Yahoo!:
- Yahoo! acquires and begins to integrate IndexTools, and the all-star product and support team led by folks such as Marton Szoke, Dennis Mortensen, Charlie Holbech, and Peter Galantha. The 7-year old enterprise product comes with a truly impressive feature set including fully customizable executive dashboards (true dashboards) and custom reports, advanced segmentation and data filters, real-time reporting, APIs, 1-click campaign integration with the major search engines, and UI customization features useful for the global network of agencies and reseller partners.
- Yahoo! makes the product free to all current customers and future customers
- Product is re-branded Yahoo! Web Analytics, with a refreshed look and feel, and the “the power of Yahoo!” by integrating it with Yahoo’s data highway.
- YWA is integrated into Yahoo’s hosted website businesses to provide powerful, free, real-time analytics without any implementation pain for Yahoo’s customers.
- YWA is integrated into the Yahoo! Open Platform to let developers track widget downloads and usage.
- First vendor evaluation of YWA by CMS Watch reports “Yahoo! Web Analytics leaps ahead of Google Analytics for Enterprise Use”
- Yahoo! Japan (with 60+% market share in JP) makes a slimmed down version of YWA available to 10,000’s of geocities users.
- Implementations completed across multiple Yahoo! properties and services for internal Yahoo! use.
- Yahoo! announces free accounts are available to ALL Yahoo! managed advertisers.
- YWA v9.5 launches, introducing features not available anywhere in the industry, or not in any free application, such as:
- Website visitor Demographic and Psychographic data, available as a segmentation variable.
- Rubix-like multi-dimensional data graphing
- Ability to add notes to a graph and export the annotated graph as a branded PDF report
- API access to raw, un-aggregated data to bring into offline systems
- Advanced user access settings and agency reporting capabilities
- Marketing attribution options, including first click and last campaign click.
- Yahoo! Web Analytics Consultant Network launches with 48 global partners. YWACN partners can issue customers free YWA accounts.
The YWA team has made great progress on a great tool in just over a year. All this, amid rapidly shifting priorities, leaders and org structure at Yahoo!.
We shall see what the new organization and the folks in charge of the Microsoft partnership think of web analytics, and how the tool is framed within the organization. That will probably determine how fast and in what direction the product innovates and free accounts are available to the market. I wish the team good luck! Keep truckin’.
Today I re-discovered this blog post by John Rodkin, the interim (turn-around) CEO for WebTrends, from early last year on the impact culture had on WebTrends declining performance (despite what was and today still is considered a strong product). It’s simply very interesting to see how leadership style and employee morale can make or break a product’s success. And it’s only more magnified when you’re in a feature race, as WebTrends “was” (keep reading) and Yahoo! is. I don’t want to draw too close a parallel between WebTrends and Yahoo!, but as the 4th CEO in 3 years, Yahoo’s Carol Bartz certainly recognizes that Yahoo!’s business model has placed it in multiple feature races, and that reforming the culture is an important piece of the puzzle to even stay competitive in many of these markets.
What’s also interesting is that I just learned today that despite this amazing graphic showing intense intra-industry competition, the analytics feature war is over.
In short, John Lovett, lead author of the Jupiter Research Web Analytics Buyers Guide finds that we are no longer in a fierce feature competition beyond a few low impact areas like video tracking. Rather the new differentiators in this highly competitive market are pricing and flexibility, and the analyst concludes that a big part of this “flexibility” is the ability to integrate different sets of enterprise data together, such as online and offline data. And he even goes so far as to say that one reason we need data integration is to unite all of the multiple ways a marketer touches a customer with a marketing message, and all of the revenue and costs related to each transaction, so that marketers can get a holistic picture of the TRUE value of each marketing channel, message, product, search term, etc.
This is what I refer to as Attribution – attributing the correct value of a transaction (not just a sale btw) across all of the elements of a marketing campaign.
Though he has taken a strong stance with this release, I pretty much agree with Mr. Lovett. I’ve been doing competitive evaluations in the analytics and SEM management space and I’ve had difficulty finding many KEY differentiators. Depending on your prioritized needs, there are multiple choices depending on the level of sophistication you need, the tools you need to integrate with, and how much you’re willing to pay. Most vendors can now provide you more than you need or will actually use. And Attribution is certainly an area the team at Yahoo! Web Analytics has been thinking about as the next frontier for analytics.
The first step in attribution is the ability to track individual visitors, not simply individual sessions, which is how analytics data is currently collected and reported by almost all major vendors (congrats to Coremetrics LIVE Profiles which seems to me to be the truest visitor-level tracking available, though there are still obstacles to be overcome as I will discuss).
Though Yahoo! Web Analytics (and others) can already identify that a visitor is a returning visitor and that today’s visit is their 7th visit to the site (at least since the user’s cookies were last deleted), no vendor with the possible exception of Coremetrics is currently able to capture data for each of those visits – at the individual visitor level – to allow you to view all of the touch points with a specific visitor before or after a specific visit or action (ie Sale), in order to track back from the purchase all of the things that affected the purchase.
Furthermore, no vendor (even Coremetrics) has the visibility to KNOW all of the touchpoints that occurred on all of the places that visitor has gone on the Internet. Sure, we know clicks, but even display ad impressions running on ad networks are hard to track at the visitor level. This is a sticking point, and will probably be best solved as publisher networks get large enough to actually be able to follow visitors for a larger % of their total online experience and thus have better insight into all of the ads, articles, widgets, and perhaps even conversations they have been exposed to. And don’t forget offline advertising exposure. We will need a way to integrate offline panel information on TV ad viewing, for instance, to get an even more robust picture of each visitor’s true exposure.
Take an Internet user who eventually purchases something on a website. It would be interesting to see all of the ways that user was influenced before making the purchase.
User X sees banner ad1
User X sees banner ad2
User X is an average TV watcher for his zipcode and demographic and has seen TV ad1 twice
User X sees that a Facebook friend was talking about the product
User X interacts with rich media ad1 for 45 seconds
User X searches on Yahoo, clicks a search ad, and looks around on the website
User X sees banner ad1 again
User X searches Google and arrives on the site and completes a purchase
Today: Google receives 100% of the credit for the purchase because all the website owner knows is that the referring source for the visit that led to the purchase was a Google search and of course the query that was searched. There is no past visibility into that user, prior visits, or prior advertising touch points, such as ad views or clicks.
Future: Advertiser enters some rules (perhaps suggested by the analytics vendor based on industry standards as well as that vendor’s customer base, and perhaps customizable by the marketer to reflect their own experience). There are many possible ways to divide the credit up amongst all the ads/touchpoints. Here is simply a list of options:
- First banner ad should get some credit for raising awareness. The value of that impression though should perhaps decline over time or expire after 30 or 45 days.
- Or perhaps split the credit between all banner ads since it’s a well known advertising doctrine that most people must see an ad 5-7 times before a message registers, so perhaps 1 on its own is not worth much.
- A banner viewed the same day as a search seems like it should receive special credit since it very likely influenced the user to search.
- What is a TV ad view worth relative to a banner ad view?
- What is a brand impression from a Facebook friend worth? It is surely much more impactful than a corporate banner ad.
- What would a banner ad containing a user review or the quote of a trusted third party be worth relative to a corporate banner ad?
- Interaction with any kind of ad is a sign of engagement and should receive credit. What is a video play worth relative to a rich media interaction? Does the length of the engagement you created matter?
- Some will argue that the last search should receive a great deal of the credit because you cannot deny that the search helped enable the actual sale, however others might argue that many people do a Google search and click an SEO listing as a way to navigate to a website after they are already “sold” on the idea in their head, so how one actually navigates to the site is of little importance at all.
- Or for simplicity sake, an advertiser might just average the value of the transaction out over all the impressions and all the clicks that occurred prior to the last click. For it may not be perfect, but at least it’s more accurate than giving the last click 100% of the credit.
These are all questions and issues that individual analysts and the industry itself are waiting to tackle, once true visitor-based tracking is available. At that point, we will finally come closer to understanding the true value of different formats of ads, publishers, audiences, creatives, offers, etc. These answers will have a huge impact on where the money flows in the $500B per year global advertising industry. So yes, attribution is kind of a big deal. And data integration a necessary feature? to help solve the attribution question.
John Lovett and the Forrester team just released their 2009 Forrester Wave Report on Web Analytics. In it, they gave great marks to Omniture and Coremetrics (wow, great work!), with Unica and Webtrends following close behind, and Yahoo and Google considered strong (especially for free offerings, which are more than enough for most website businesses in many people’s opinions, including mine).
What is most immediately obvious is that this is a highly competitive field of players with plenty of strong offerings providing something for most any kind of website tracking and online marketing need. Furthermore, this intense competition will only lead to a faster pace of innovation (my favorite) and hopefully differentiation (my 2nd favorite).
What is unfortunately less obvious is that this evaluation leads shoppers to believe that the best solution is in the upper right, a “strong offering” with “strong strategy”. 🙂 It is unfortunate because many businesses DO NOT NEED the “strongest” offering, as determined by the package with a broad suite of applications that do very specific and often very sophisticated things, and include the MOST features (aka bells and whistles). For many businesses this level of features is actually overwhelming and intimidating for users (many of whose requirements are actually simplicity), requires a great deal of up-front setup and training (which becomes an ongoing need), and as you can imagine can get pricey (> $200k/year is fairly normal for big packages).
So the question is really how much power does your organization need, what actual business problems need to be solved with analytics and how SIMPLY does the solution solve it for them. Another question is related to staff and budget. With huge budgets and staff, powerful tools can pay themselves off. With moderate budgets and staff, sometimes that money could better used on staff (or marketing) rather than a tool to collect reams and reams of data. I have an entire list of vendor evaluation questions you should ask when selecting a web analytics tool, but if you’re on this page you’re either already familiar with analytics or you’re a newby, in which case it is probably not a top concern for you right now.
In fact, if you want to learn more about the analytics market, you can visit Wikipedia, go here for some basics from Eric Peterson’s book, check out Avinash Kaushik’s page for beginners, or perhaps just check out a new video on Yahoo Web Analytics to see an analytics tool in action.
In my next post, I will go in-depth on Yahoo’s own web analytics initiative, and even some of the top-of-mind things Yahoo (and others) are thinking about to help website owners improve their business and drive more, better leads to their website.
For the past few days I’ve been playing with Bing.
My first impression is that Bing has done a good job focusing on relevancy and the ability for users to easily refine their search intent after the initial search. Bing has also added some new wrinkles to make certain kinds of searches — in particular shopping, news and entertainment — somewhat easier to do. While Carol Bartz thinks that the re-launch will not impact share much – which was my immediate reaction at first blush too – I am a little more concerned than she is.
Bing is definitely launching at a good time to gain awareness. While a revamped search engine by MS would not normally be considered juicy news, as an avid internet user myself, there feels to be a bit of a dearth of news going on right now – the Facebook and Twitter talk is getting stale, and so are John & Kate + Eight. And there are certainly more and more jobless out there with more time on their hands to play around on the internet and chatter about a new free online app. So the timing is good to give content-starved bloggers and internet users something to play with and pontificate about. Oh, and by the way, yes I did use the word “app”. Some of Bing’s usability improvements do qualify Bing as an “app” in my humble opinion. In fact, making the search experience more like an app is probably a story in its own right. People enjoy apps, and until now they haven’t exactly found search engines “delightful”. With Bing’s new video view, I think Bing is getting there. With a little luck (and continued marketing campaign), Bing could indeed threaten Yahoo as a #2 search engine, which to me is the story.
For a first-time user, after an hour or so of playing with Bing, I think most users will still get the impression that Bing is still not differentiated enough to change their search behavior. And after a couple weeks now, the name still does not capture the imagination — nor does it work well as a verb. I think this is a definite mistake.
“No honey, just bing the restaurant”
“Guess what, I binged her boyfriend last night. What a weirdo.”
“Did you Bing Map the store? Did you try Bing Shopping?”
Can it catch on? Yes. But in the culture of cool, it is not a delight. It is still of course easier to bing your girlfriend than Yahoo! Search her, so Bing does one up Yahoo! as potential mainstream lexicon.
Strategically, Bing is focused on making it very easy to refine searches – by search intent (with the side bar and the way results are organized) and by result format (URL link, video, image, etc). Furthermore, Bing has clearly focused its ease-of-use features on shopping types of activities, which makes sense because shopping searches are by far the easiest to monetize with advertising. In fact, this is where the war will be won, since most advertisers will follow the shoppers. Ultimately, one risk to Google is that it’s quite possible that an engine like Bing or Yahoo could catch on as the best engine to use for shopping and leave Google as the engine for “research”. This is not new. In fact, MSN used to – and Bing has carried 0n – cash back discounts for shopping done on the engine. It hasn’t been successful, but did you read Tipping Point?
After my first impression (which is perhaps as far as many will get), I read a little more buzz and revisited Bing to play with it a little more (thank you bloggers!). Gradually I found just enough new wrinkles in each of my search experiences to feel a bit of the joy of discovery that one gets from a new app. There are certainly just enough wrinkles in the search experience to keep one exploring. [Though relevancy is always Job 1 with any search engine, relevancy alone is not a very delightful experience worth buzzing about].
I’ve found that Bing does a perfectly adequate job (as does Yahoo) of producing relevant results for most searches [some might disagree; I of course agree with myself]. In fact, Bing’s results are sometimes even better than Google’s if you tend to be most interested in news about what you’re researching. Bing does a very good job of incorporating this morning’s news into search results (better than Yahoo), which actually makes sense — if you’re looking for a way to differentiate, the easiest way to do it is to engineer recency into algorithms when you don’t have the SEO juice Google and Yahoo have built up with the advantage of time and search volume. When you think about it, however, news-based relevancy is also the easiest differentiation for new entrants (or incumbents) to imitate. There are plenty of search services trying to differentiate on real-time search.
To test relevancy yourself, go ahead and compare Google and Bing results side-by-side.
The Bing Scorecard
1. Search Relevancy & Getting to Answers Quickly: Bing’s sidebar of categories and the way results are sectioned helps the searcher quickly scan and refine search results. For the query “turkey” the sidebar shows:
This is arguably accomplished already by G and Y by how they blend search results to provide something for many kinds of search intents, the way results prominently use wikipedia, etc., and by using sublinks to show deeper into the resulting webpages, all of which provide most of the options that Bing’s method provides.
On Bing, scrolling over a result will (sometimes – bug?) preview a short snippet of text on the page to see whether the content is relevant before clicking through to it. Many results that are a homepage show sublinks of key pages deeper within the site, similar to Yahoo’s and Google’s quicklinks
2. Flight Search: For flight travel searches, such as “lax to sfo”, bing immediately provides you the lowest available flight in its online search (akin to kayak). In comparison, Google presents a box to enter your date range, and links to popular sites to instantly run the search. Yahoo doesn’t provide instant help, just search results.
3. Video: For web searches, where video results are blended in, or for pure video searches, bing gives you the very cool, very time-saving ability to hover over a video to instantly play it, which I have to admit makes it really easy to both scan videos to see whether any or all meet your needs, or just consume the content there without clicking through to another website. For the search ‘will ferrell’ both bing and google provided video results, Yahoo did not. I don’t do very many searches where I expect a video result, however I must admit that now I will definitely think twice before I begin a search session to consider whether a video result is likely, because it is so nifty to review content this way. I’m a bit shocked myself, but this may actually be the killer app that bing is counting on.
4. Image Search: Like videos above, I really like bing’s infinite scroll capability, since again it doesn’t require page loads to go from one set of photos to the next. Google doesn’t offer infinite scroll (bummer), but it does offer an easy way to filter results by image size, some options for the type of content images are tagged with (faces, photos, news, clip art, even line drawings!), and even colors in the photos (for design usages I imagine). Yahoo provides a slideshow type of way to quickly scan through a large set of “Recent images” at the top of the screen. It’s sort of hidden, but Yahoo also provides a dropdown with ways to narrow searches by image size, color v. black & white, flickr or non-flickr images only, and what kind of restrictions the creator may have on the images for re-use.
5. News: Bing just launched but after a couple days using it, I’ve noticed Bing does a good job of incorporating today’s news into its search results. IMO – or perhaps it’s just the searches I’ve been doing – what’s more relevant than big items in today’s news? In fact, according to Yahoo, “winner of make me a supermodel” is the top search right now on Yahoo, yet when I go to Yahoo’s search results I get a normal set of results where a searcher would need to click through to one of the sites to (hopefully) learn the winner. On bing, there is information about the show at the top of the page including who was eliminated last episode, remaining contestants, and all of the original contestants. There are also “Related searches” in the sidebar which may also help answer a question, or refine results. And of course there are video results at the bottom to easily scan for answers. However, the quickest result of the 3 engines was Google, which had a blog article titled “Make Me a Supermodel Winner” (posted 50 minutes ago) with an image of the winner next to it.
6. Local Search / Maps: I searched “video store, 90027”. Google and Yahoo produced similar results with a local map at the top of the page and a list of local video stores next to it. Google’s list of local video stores was twice as long. Yelp was the 2nd result. Bing’s result was not nearly as good (and yelp was noticeably missing – perhaps yelp hasn’t built up the SEO juice yet?), however when you click the Maps header link you presented with a very nice map. The way it was presented clearly and with the area’s topology I found very nice to read. And when you hover over a result, a picture pops up with business name, a photo, and links to get driving directions, etc. The only problem was that it was noticeably missing local video stores, including my preferred video store. Yahoo’s version, Yahoo Local, presented me with a better list of local video stores (including my store) but the map wasn’t very useful (far too large an area was presented) and I had to Enlarge the Map (unneeded click) to make it usable and then fiddle with it a bit; for instance, hovering over the points on the map did not pop any information up for you – you needed to scroll up and down the list on the side. There is a satellite and hybrid viewing feature but I didn’t find these as useful. Google Maps is very clean and zoomed in to my local area. It had the most local video stores of the 3. Hovering over the points gave the business name only. Google’s “Terrain View” is quite good as well.
7. Shopping: I did a search for “Michael lewis book” and only google’s shopping feature actually presented me with his new book at the top of the list. Neither Yahoo nor Bing showed the new book in the first page of results, which is basically an unsuccessful search, after which I would likely leave for a better or more targeted shopping engine.
More interestingly, Microsoft has carried forward its search “cashback” program where a portion of merchant results for shopping search will be tagged as “cashback” deals offering some kind of discount. When you complete a transaction (a “conversion” from the advertiser perspective), you get cash back into a user account you setup. When you have $5+ in your account, you can request your cash back from Microsoft. It’s clearly a way to incent search engine users (at least price sensitive search engine users) to use bing for shopping-related searches. This makes sense for a number of reasons, the biggest and most obvious is that search engine advertisers want “conversions” – most search engine advertisers are hoping to complete a commercial transaction of some kind and will allocate marketing dollars (and very importantly, time) to search engines based upon where they generate the most revenue and best ROI.
Should Google and Yahoo be scared?
The brand awareness and top-of-mind awareness game is being played out right now. Once you’ve played with it, I do think that many users will begin to consider Bing over their current search engine just to continue learning about it, as well as for certain types of searches such as video and travel, where Bing has a nice advantage from a usability perspective in my opinion.
Yahoo should be more concerned than Google about losing share, since they are already being chipped away by Google (as searchers get more advanced they tend to switch to Google and both Google and MS are in a better position to out-spend on partner deals to be the default home page or search tool). Second, Yahoo’s asset is slowly being undermined by the one and only company interested in buying it. In wall street terms, if 20% of the market is $1B per year in revenue, then two points is very likely in the $100M’s (per annum) or $1-2B in market cap.
Third, from a search monetization point of view, for a search engine advertiser, there is a search volume threshold at which point it is no longer worth the bother to invest time and energy managing campaigns on a search engine. In April 2009, Google had 64%, Yahoo 20.4%, MSN 8.2%, Ask 3.8%, AOL 3.4%. At 20% of the market (and clear #2), Yahoo is enough volume to be worthwhile for well-resourced companies and some smaller businesses to make investments to go after those leads. If and when the market becomes closer to 65-15-15 – well that’s when an advertiser might justify spending that time and money on other channels – and we’re not just talking other search engines, but other traffic sources whatever they may be, including print, radio, localized sites/yellowpages/yelp, banner ads, etc. One thing we do know, once you’re #3 — like MSN is right now — the advertiser base falls off quite a bit (which explains the highly irrelevant sponsored search results you’ll find on Bing/MSN right now).
Furthermore, Yahoo is actively trying to focus its business (and shed costs), so it’s hard to imagine it can keep up in the investment race. In fact, innovation is likely to go even slower than it has gone; Yahoo’s best hope is probably attracting developers to BOSS and SearchMonkey, in other words open up and let others do the innovation for Yahoo. These initiatives have not exactly taken off yet, so competition for developers is yet another sphere where Yahoo is under-resourced vs. Google, MS, Apple, and even Facebook, Twitter and other newbies.
Strategy – If you can’t buy em, bleed em to death
At the end of the day, search engines monetize their business by bringing advertisers into the fold, providing them quality searchers and searches that lead to sales. For the most part, e-commerce advertisers that “sell stuff” like products or leads to other businesses (i.e. shopping engines or insurance quote aggregators) are those with search engine marketing budgets and staff. When you are a #3 or #2 player, you really need to do things to ensure that you are a sizable enough portion of sales leads to justify marketers spending resources (money AND TIME), on your search engine to actively create and manage ad listings for the 1000’s of search queries, bids, ads and landing pages that are required for EACH query on EACH engine. Each Keyword/Bid/Ad/LandingPage combination is tracked and optimized, as appropriate, and this is very manual work, even WITH SEM and bid management software that can cost well over $200k/year. When you’re a one- or two-man online marketing team and you’re only getting 10% of your sales from the #3 search engine, you can either choose to spend time doing a better job on the other 90% or you can spend time on that 10%, or you might even spend that time on other lead generators, such as banner, affiliate and email marketing, etc.
When it’s 20% of your sales, it’s clearly more compelling, but still not compelling enough for MANY. At 61-20-8, Google is a must for most advertisers and Yahoo is a good chunk if you have the resources to manage it, and finally MSN, a clear 3rd place, and a big drop-off point for many online advertisers, pending the opportunity costs. 60-30 makes a MS/Yahoo partnership/merger a more compelling second option for advertisers, particularly small and medium advertisers with scarce staff and budget.
The Future: One Stop Search + Display Advertising
Long term, however, when you consider that one day search AND display advertising will perhaps run through the same ad management system, suddenly MS/Y! are actually in a market leading position due to Yahoo’s and MSN’s current lead in the display market. This is why MS wants to combine with Yahoo. HOWEVER, if the combined search marketing system runs through the MS platform, and MS now owns the advertiser relationships, MS is now in a position to complete the search/display integrated platform value proposition and begin undercutting Yahoo’s display-only value proposition. Many advertisers will still want to run their ads on Yahoo properties, but it may be more difficult to create a liquid market and create customized “guaranteed” ad deals – which command higher prices than “non-guaranteed” or run-of-network buys. The degree to which that leads to softness in advertiser demand for Yahoo banner & video placements is the potential catastrophic risk that Yahoo is considering right now, when determining the value of a search deal.
If you can’t buy em, bleed em to death. That seems to be both Microsoft’s and Google’s ‘Yahoo strategy’. One that COULD work, if advertiser and ad agency search and display marketing departments DO merge and seek this integrated platform, and if Yahoo cannot continue to innovate and differentiate its display ad network (with advanced forms of user targeting, dynamically created ads, or robust user profiles, for instance), OR if Yahoo cannot maintain its share of time and attention of the world’s internet users, particularly the high income and spendy ones.
I think Yahoo is prepared to take that chance, BUT will the value to Yahoo ever match the value to Microsoft? Yahoo wants to sell at some multiple of the current search revenue + some money for the risk selling search poses to the overall advertiser value proposition. The value to Microsoft is not as clear since it likely extends beyond the literal value of the search monetization business, and into other synergistic benefits in building that online presence.
Even with a sale, there is a great deal of work in store for Microsoft & Yahoo teams to make the new search system work, so it is a risk and resource suck even with an outright acquisition.
I think the next few months of Bing will tell a big tale. If Yahoo has lost search share 2-3 months from now, and advertisers’ Yahoo budgets begin to fall, Yahoo will want to get what it can to avoid a long protracted search investment battle. Remember, this is not just G and MS that Yahoo is competing with in search, but social networks, newcomers and mobile. Yahoo will have to compete on ALL of these fronts, and that is just too big a risk to the rest of the business where Yahoo DOES have a competitive advantage and would like to focus.
If Bing’s big push does little, I don’t think there are many more rabbits to be pulled out of their hat to organically get that share. They will have to buy that share through embedded browser partnerships, which I believe they are very prepared to do. Google, with its brand and cash, will not make it easy to do. In FACT, I don’t see it as likely but if Apple ever developed or acquired a search product and embedded it on its own computers and phones, this would actually be a serious NEW threat to even the incumbents, even Bing.
I don’t see acquiring a strong up-and-coming search prospect or aggregating a bunch of little engines as the answer either. I don’t see Twitter or Ask as threats to steal serious share – at least not until they can provide a really NEW shopping experience and steal shopping share. Real-time search is nice for some people (people who want news, which is not monetizable). But the rest of the world wants relevancy for EVERY search they do. The incumbents are strong and in a game that’s all about always producing the most relevant results, the network effects are simply too large for a small guy to leapfrog the big boys.
Apple Search + Yahoo Open?
It’s kind of fun to think about Apple in the equation. Apple would never acquire Yahoo or Yahoo Search because it is a hardware company, not an advertising company. HOWEVER, if Yahoo’s BOSS project can offer Apple a solid search platform that Apple can slap it’s brand on and innovate upon, I can see a way for Yahoo to stay in search while simultaneously taking focus off search. Apple would own the brand and user experience and potentially work a way to take more of the profit split than they get from Google (this assumes Yahoo’s new APT platform can draw enough advertisers to continue doing a competitive job monetizing searches), and Yahoo would continue to own (and strengthen) the advertiser relationships with its ad platform.
Web 2.0 finally realized by the first Web 2.0 company. : )