Posted September 29, 2008 3:35 pm by with 6 comments

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Almost three weeks ago, Yahoo defended the Google ad deal with executive vice president Heather Schneider. Maybe it’s just a postmortem twitch of the old competitiveness, but now that Google’s stepping up its defense of the deal, so is Yahoo, this time bringing in President Sue Decker.

Friday’s post on the Yahoo Anecdotal blog, entitled “Myth-Busting and the Yahoo!-Google Agreement,” highlights the reasons why Yahoo wants in on the deal:

  • Yahoo! will use this agreement to help us become a stronger competitor in all aspects of online advertising; and
  • Yahoo! is not exiting the sponsored search business. We plan to remain a strong player in sponsored search.

Search Engine Watch’s Nathania Johnson says that this Yahoo-centered explanation doesn’t offer much persuasion to critics, who include some current AdWords advertisers:

But the fact that she’s going after this argument by defending the business aspirations of Yahoo might show why this company is struggling in the first place.

Companies succeed when they focus on the customer. But Yahoo is focused on stock prices and board preservation. This is not the way to win the hearts of search advertisers or investors.

Personally, I think that showing that your company is still in the business of making money is probably a good thing to show investors, but I agree that saying that this deal will help Yahoo stay afloat competitive doesn’t make me want to jump right in as an advertiser.

Decker also addresses the question of implementation, telling us that Google’s paid ads won’t replace Yahoo’s system altogether (hence the above reassurance that Yahoo’s not getting out of the search advertising business):

We will implement the agreement in a way that respects an important principle you may know as the Hippocratic Oath: “first, do no harm.” That is, we will not use Google ads in a manner that would create a significant risk to the health of our own sponsored search business.

Before I comment, I have to bow to my factchecking side: “FIRST, DO NO HARM” IS NOT IN THE HIPPOCRATIC OATH. See the full text of the Hippocratic oath. Search for that phrase. It’s not in there. Now you know. Never make that mistake again and be ye therefore educated.

Ahem. Anyway. Instead of replacing their ads with Google’s, Yahoo will use Google’s inventory to “backfill” their results pages: on queries where Yahoo doesn’t have very many ads, they have the option of including some of Google’s ads to (1) increase their profits, (2) provide more leads/clicks for advertisers and (3) provide users with relevant ads. (I know, it’s like Christmas in September.) Yahoo has the right to exercise its backfill option on any page—or none at all.

Decker also echoes many of Google’s arguments, including that the two will not collude nor fix prices. Of course, as Danny Sullivan writes in today’s Ad Age, Google is already fixing prices through its quality score.

Who will benefit most from this deal—users, advertisers, Yahoo or Google? What do you think?