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The One in Which I Ponder the Chances of Success for Microsoft & Yahoo

posted on August 3, 2009


Now that we’ve all had time to digest Microsoft’s 10-year deal with Yahoo, it’s time to ask ourselves if this partnership will live up to the hype?

It seems like we’ve been talking about this deal every other day for the past year or more. In fact, digging through the Marketing Pilgrim archives–and ending up 30 pages deep in “Microsoft/Yahoo” rumors–I discovered it was back in September of 2007 that the idea first germinated:

…Under the scenario discussed by top executives, Yahoo would have outsourced that search-advertising activity — which places small text ads next to Web search results — to either Google or Microsoft Corp…

At the time, Yahoo’s then CEO Jerry Yang said there were “no sacred cows” for the company. Then promptly dismissed any notion that the company would give up operating its own search engine.

My, how things have changed.

Now–with the drama behind us and the deal announced–we need to consider if this act of collusion will end up presenting a serious challenge to Google’s dominance. While Microsoft’s Bing.com continues to inch forward with market share, will the general search public flock to the Google alternative–or will it send us deeper into the warm embrace of the search engine we’ve loved for the past decade?

I could see how we might ultimately come to like Bing. It’s got a catchy name, some cool TV ads running, and could provide those that love to live outside the mainstream, a flashy new search engine to evangelize. But, does a partnership with Yahoo actually dilute Bing’s chances of success? I’m not talking about success as measured by an increase in market share–by that measure, the deal is already a winner. I’m talking about real success. The kind of success that doesn’t just come from cannibalizing Yahoo’s existing search traffic, but from honest-to-goodness market share stolen from Google.

That’s where I simply don’t see much chance of a happy ending. I’ve worked for a company that decided it wanted to increase market share by means of acquisitions. Sure, you get to show growth on paper, but that’s not growth that’s sustainable. It pleases the shareholders, but neither the heart or mind are satisfied. Want further proof that buying market share is not sustainable? Take a look at the stagnation going on over at IAC’s Ask.com.

The biggest obstacle now facing Microsoft’s Bing is this: do we consider it a weaker offering, because it had to partner with Yahoo? Or, does the partnership increase its chances of success?

Perhaps the only glimmer of hope for Microsoft is that Yahoo has played this role in a previous life. Remember when all of your searches at Yahoo were powered by Google? Back then, Google was still building its own audience, and the exposure provided by Yahoo was, obviously, valuable to the company. Can Yahoo do the same for Bing?

There are many questions that I’m leaving unanswered. This post is merely a means for me to share my own thoughts on the deal–not to tell you how you should feel about it. Feel free to chime in with your own opinion on the chances of Microsoft and Yahoo truly challenging Google. I look forward to reading them!


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  • http://www.frankthinking.com Frank Reed

    Andy – I think how we feel about the deal now is going to be completely different from how we feel over the next 24 plus months before this thing even hits full stride. I envision a ton of confusion in the interim with people wondering what parts of whom have been integrated with what and when it happened. Now, let’s get real honest here …….. outside of the Internet marketing industry (which is pretty big I agree) will anyone (as in Mr and Mrs John Q Searcher) know that anything has really changed? We industry folks have to always be careful to just sip the Kool Aid and not chug it.

    Of course, I always reserve the right to be completely wrong thus absolved of any responsibility for my thought and actions ;-)
    .-= Frank Reed´s last blog ..Good Sales Help is VERY Hard to Find =-.

  • http://www.edinborocreations.com Ward Troewtsc hel

    I see it as too early to know just what the Microsoft?yahoo partnership will really mean. As the principle of a website that buys search marketing from both Google Adwords and Yahoo adsense(?) and within a few hour buying search on bing.com from “Microsoft Ad Center” ; I can state specifically that in this economy I will use to means available to drive customers to my website and generate the all important sale.
    Will “real” people even care about this partnership? The answer is only if it helps them fulfill a basic need – like conveniently buying stuff that they want or need as inexpensively as possible. Bing.com will need the social content that Yahoo can provide it if it is to be successful. Microsoft will need to spend a lot of money and stay focused if this partnership is to succeed. Both Yahoo and Microsoft are probably risking everything – Perhaps the real question in all of this is “Can Microsoft and Yahoo survive without this partnership being successful?”. My crystal ball says “YES” – I hope it is right.

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