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Early Indications Bing/Yahoo Partnership Delivering Search Results

Microsoft’s Bing has effectively taken over Yahoo!’s search engine business.  The deal sees almost all of Yahoo! worldwide users being able to continue using the familiar interface, but with the actual results powered by the Bing search engine.  The deal was covered in one of our August posts on the Bing-Yahoo!-Google search engine love triangle.

Initial indicators coming out of the business data and bean counting analysts is that the deal is delivering positive results, for both paid and unpaid search results.  In particular, the results demonstrate that Bing is a more effective platform for delivering advertisements on the Yahoo! search engine; if you’re a marketer, this is the news you want to hear.   This is crucial if the combined search engine is to start gaining any traction and win market share from Google, which dominates the search market, but there is going to be an uphill struggle before the partnership is anywhere near out of the woods.

Individually, Microsoft and Yahoo! expended billions on their individual efforts to carve out market share, but all this did was allow Google to consolidate its dominant position in the absence of an effective competitor.  Both companies headed back to the corporate and technical drawing board just over a year ago, and the result was a merging of technical capability and the commercial offering, mostly the latter.

The result is a streamlined search engine operation which is packaged as Yahoo! (for Yahoo! users) but which is all Bing in the background.  The major technical hurdle has been to integrate the two company’s technology to deliver the paid ads from Microsoft’s AdCenter to Yahoo! users, and this appears to have been a huge success.  Full integration appears to be on track for completion this month, and the Bing/Yahoo! combination will then continue to be rolled out worldwide over the next two years (except in Japan, where, in a perverse irony, Yahoo! did a deal with Google to deliver search results).

Bing was launched in June 2009, and it has seen excellent growth numbers in the four major advertising categories since.  Automotive is up 53%; health up 61%; travel up 41%; and finally, shopping up 55%.  Click-Through-Rates (CTR) for the combined Bing-Yahoo! search engine offering are increasing too; primarily because Microsoft AdCenter is able to deliver far more relevant ads to Yahoo! users.   Bing also appears to be following a pricing strategy to keep Pay-Per-Click (PPC) ad inflation below that of Google’s, while the market generally is anticipating steep PPC price rises as the economy recovers.  This will certainly result in Bing capturing increasing market share, unless Google engages in a price war.  Google will not like to see this given it is increasingly seen by Wall Street as a “cash cow” and less of a “Rising Star”.

There is one caveat; this is all set against a small backdrop as Bing/Yahoo! accounts for less than a third of the search engine market.  Running in Bing/Yahoo!’s favor is the fact that the US paid search market is growing, some estimate at more than 6% this year and possibly more, as the business economy starts to pick up and once shy marketers return to online marketing to increase sales growth.

Takeaway

The Bing/Yahoo! merger is delivering good results.

All metrics are positive for marketers.

Costs to be held down as market grows.

Continue to watch this space.


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