Microsoft and Yahoo announced on their respective blogs that they'll try to port Yahoo's U.S. advertisers and publishers onto Microsoft's AdCenter platform by the end of 2010. Under the terms of the companies' search-and-advertising agreement, Microsoft will take over back-end search and search advertising for Yahoo's properties, while Yahoo takes over worldwide sales-force duties. If the transition to the AdCenter platform threatens to be delayed, Microsoft and Yahoo will wait until early 2011 to actualize that part of the deal.
Microsoft and Yahoo aim to have major aspects of their
search-and-advertising deal in place by end-year holidays 2010, according to official
blog postings by both companies, including porting Yahoo's U.S. advertisers and
publishers onto Microsoft's AdCenter platform.
Under the terms of the companies' agreement, Bing will power
backend search for Yahoo's online properties, while Yahoo takes over worldwide
sales-force duties for both companies' search advertisers. Microsoft's AdCenter
platform will power search advertising for Yahoo, as well. For the first five
years of the deal, Microsoft will pay Yahoo traffic acquisition costs (TACs) at
an initial rate of 88 percent of search revenue generated on Yahoo's sites.
"The Yahoo and Microsoft teams have been working hard to
design a high quality transition experience for customers," Carolyn Miller, a
member of Microsoft's AdCenter Community Team, wrote
in a May 6 posting on the AdCenter Blog
. "We're working toward completing
this transition in the U.S. and Canada before the start of the 2010 holiday
season, with additional countries following on a staggered schedule beginning
Yahoo customers "will start to receive emails from Yahoo in
the coming months with tips on how to prepare your campaigns for Microsoft
AdCenter," Miller added. "Beginning in late summer, Yahoo customers will be
able to initiate the transition process, and have several weeks to complete
In a separate May 6
posting on its Search Marketing Blog
, Yahoo indicated that the transition
to AdCenter would be delayed until early 2011 if problems threatened to drag
the process into the holidays.
The U.S. Department of Justice and the European Commission both
cleared Microsoft and Yahoo to begin their 10-year search and advertising
agreement on Feb. 18
. "U.S. market participants express support for the
transaction and believe that combining the parties' technology would be likely
to increase competition by creating a more viable competitive alternative to
a statement at the time from the Justice Department
. "Most customers view
Google as posing the most significant competitive constraint on both Microsoft
and Yahoo, and the competitive focus of both Microsoft and Yahoo is
predominantly on Google and not on each other."
According to a recent report from analytics firm Experian
Hitwise, Bing's share of the U.S. search-engine market dipped slightly to 9.43
percent in April, compared to Google's 71.40 percent and Yahoo's 14.96 percent.
While Google dominated with regard to overall searches, Bing experienced strong
gains in a number of vertical industry categories, including health, travel,
automotive and shopping.
If Yahoo's search numbers are ported over to Bing with no
attrition-a highly theoretical prospect-then Microsoft will be competing
against Google with roughly a quarter of the U.S. search engine market. While
that may not be enough to threaten Google's commanding share, it will certainly
alter the competitive dynamics of the search-engine landscape.
But the actualization of the Microsoft-Yahoo alliance also
carries some risks.
"We believe the challenge now lies in implementing the
partnership so that the transition is smooth for customers and partners,"
analysts for FBR Capital Markets wrote in a Feb. 18 research note. "Microsoft
and Yahoo need the implementation process to proceed smoothly in order to
prevent business disruption of their customers and partners... Any glitches could
result in customers and partners diverting more of their business to Google."