Microsoft + Yahoo: What’s It All Mean?

YHOO-MSFT Search Deal
SMX WestMarch 2010

Why MSFT-YHOO? It’s All About Share!
Paid Click Share by Engine
(Efficient Frontier Index)
It takes >20% market share to establish
relevancy to a large base of advertisers.
2

The YHOO-MSFT Dance
Dec 2009
Definitive Agreement Signed
2H2010
Deal Implementation
Jan 2009
Carol Bartz New CEO at Yahoo
Feb 2008
MSFT Offers $31/Share
2008
2009
2010
Jul 2009
Letter of Intent for Search Partnership
Feb 2010
US and EU Clearance Granted for Deal
May 2008
MSFT Withdraws Offer
3

The Salient Points of the Deal
Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies, and Microsoft will have the ability to integrate Yahoo! search technologies into its existing Web search platforms
Yahoo! will become the exclusive worldwide sales force for both companies’ premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform.
Yahoo! will innovate and “own” the user experience on Yahoo! properties, including the user experience for search, even though it will be powered by Microsoft technology
Microsoft will pay traffic acquisition costs (TAC) to Yahoo! at an initial rate of 88 percent of search revenue generated on Yahoo!’s O&O sites during the first five years of the agreement
Microsoft will guarantee Yahoo!’s O&O revenue per search (RPS) in each country for the first 18 months following initial implementation in that country
4

Key Benefits
Risk: Can Yahoo stay relevant in search?
5

Advertiser Benefits and Risks
6

CPC Variance Between MSFT & YHOO
7

Questions?
Justin.Merickel@efrontier.com
Follow Us: twitter.com/efrontier
8

Microsoft + Yahoo: What’s It All Mean?

by Efficient Frontier on Mar 05, 2010

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Microsoft + Yahoo: What’s It All Mean? — Presentation Transcript