POV on Impact of Microsoft/Bing and Yahoo Search Alliance, by Rob Garner and Chris Wallace, iCrossing

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Point-of-view on the announcement of the Bing/Yahoo Search Alliance, and the subsequent impact on paid and natural search programs for enterprise business, by Chris Wallace, and Rob Garner of …

Point-of-view on the announcement of the Bing/Yahoo Search Alliance, and the subsequent impact on paid and natural search programs for enterprise business, by Chris Wallace, and Rob Garner of iCrossing.

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  • 1. icrossing PoV: +Written by:chris WallaceSenior Vice President, Digital Media Services, iCrossingrob garnerStrategy Director, iCrossingJUly 2009
  • 2. icrossing PoV: MiCroSoft & Yahoo! PartnerShiP JULY 2009 Microsoft & yahoo! PartnershiP – an icrossing PersPectiVe as you’ve likely heard by now, one of the biggest search stories of the year is that Microsoft will now power Yahoo! search, while Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. it is important to note that these changes will not impact advertisers, agencies or consumers, for what Microsoft and Yahoo! have stated is approximately 18 months from this moment. that means that there is no material impact in 2009 and likely little impact in 2010. it is also important to note that this agreement will require regulatory approval from the Justice Department; it’s likely that there will be legal opposition from google and perhaps others. With this union, Bing would command approximately 25-26 percent share of market according to various sources, though at iCrossing we have found through our own analysis that the actual combined average Bing/Yahoo! share of natural traffic for our clients is as low as 18 percent. While this partnership produces a much stronger number two player in the search landscape, google is still the main focus. Generally speaking, consolidation of media networks in the market place is cause for concern for advertisers. However, the current dominance of Google as a search advertising network, changes iCrossing’s point of view on the benefit of this consolidation. We believe Microsoft and Yahoo!’s agreement will benefit advertisers, agencies and consumers. Consumers will benefit from what the market has agreed is a more relevant search result experience from Bing compared to Yahoo!. Yahoo!’s natural search results will now be powered by Bing’s significantly-improved search results. This should lead to a better search experience and increased “search loyalty” for Yahoo!’s user base. Advertisers will benefit from Yahoo!’s commitment to use Microsoft’s Adcenter to power paid search listings due to Adcenter’s renewed commitment to use relevance (measured by click-through rate, primarily, and ad copy and landing page content to a lesser degree). This means that advertisers who intelligently manage their SEM programs should benefit from stronger CTR, lower CPCs and better conversion rates. When these factors are applied to the more significant search volume associated with Yahoo!, the benefit will be more significant and have a greater impact on the entire digital media plan. Advertisers will also benefit from what we believe will be a more focused commitment on Microsoft’s part to build better targeting and experience tools for advertisers to use within Adcenter. The financial impact of successful tool development and application will now have a far greater impact on the revenue associated with these efforts. Also, the agreement allows Microsoft a license to use Yahoo!’s search technologies in its own applications. That means that effective features from both Adcenter and Panama will likely be combined. This should drive increased focus, attention and innovation on the Adcenter application. Agencies will benefit from this as they will now primarily focus on Google’s Adwords/Adsense and Microsoft’s Adcenter applications to drive the majority of volume from paid search programs. We will no longer need to distribute focus and attention across three major players, and can instead focus on two players. This should sharpen our ability to maximize value for clients in these advertising networks, and should increase the value delivered to clients.© 2009 iCroSSing. aLL rightS reSerVeD. 2
  • 3. icrossing PoV: MiCroSoft & Yahoo! PartnerShiP JULY 2009 At iCrossing, our natural search approach has long been to provide the best optimization practices in order to be effective across multiple engines, including Google, Yahoo!, and Bing. Though there are now two players, this approach does not change, though having two main engines of focus will allow for greater attention to some details. Fundamentally, experienced SEOs shouldn’t be too concerned about a shift in approach, especially with so much time before launch. Here are a few other thoughts and considerations for Bing optimization, and impact to natural results: On-page optimization factors. On-page factors are similar across Google, Yahoo! and Bing. The same optimization elements that help one gain visibility on Google also apply to performing well on Bing – page titles, URL structure, header tags, meta descriptions, and on-page content. Additionally, with Bing’s emphasis on “related searches”, crafting an optimized internal linking structure may help maintain visibility when Bing users refine their search queries. Off-page optimization factors. It’s no secret that one needs to optimize offsite to rank well for very generic non- branded keywords. Domain age, the number of backlinks, the quality of those backlinks (the number of backlinks on the page that is linking to you, pages with relevant content, etc.), the anchor-text being used – these are all things to consider if you are actively optimizing for any of the major engines. What we have seen in recent months is Bing’s preference for “older domains”, and not necessarily the number orf backlinks. Google, on the other hand, seems to place more weight on anchor-text and the number of backlinks coming from pages with relevant content for the target keyword phrase. Ranking performance reporting is reduced. Just as AOL rankings are a mirror of what you get in Google, we expect that Yahoo! rankings will also mirror Bing’s rankings, which may make ranking reporting more efficient by having the option to reduce the amount of duplicated data. Gap analysis should be a priority in order to prepare for any major changes. As Bing gets closer to rollout in Yahoo! months from now, it will be a good idea to perform both ranking and traffic gap analysis between the two in order to try to gauge the impact on these two aspects. Noting any major ranking or traffic referrers in Yahoo! that are missing in Bing will allow marketers to make up for the gap by either increasing paid search spend, or engaging in an aggressive optimization program to recapture that visibility in Bing. What becomes of Search Submit Pro? Some advertisers who have difficulty with their natural search visibility opt in to the Search Submit Pro program at Yahoo!, which algorithmically increases visibility in the natural results, but also applies a per-click cost to the advertiser. It is currently not known whether or not Bing will adopt this approach, or remove the program altogether. This could cause a great number of advertisers to lose natural ranking visibility, and force them to get a true search optimization program in gear very quickly if they are not being found in Bing. The following is an excerpt from the official press release issued by Microsoft and Yahoo! on Wednesday July 29, 2009. The key terms of the agreement are as follows: + The term of the agreement is 10 years. + 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. + Microsoft’s Bing will be the exclusive algorithmic search and paid search platform for Yahoo! sites. Yahoo! will continue to use its technology and data in other areas of its business such as enhancing display advertising technology. + Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform, and prices for all search ads will continue to be set by AdCenter’s automated auction process.© 2009 iCroSSing. aLL rightS reSerVeD. 3
  • 4. icrossing PoV: MiCroSoft & Yahoo! PartnerShiP JULY 2009 + Each company will maintain its own separate display advertising business and sales force. + 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 compensate Yahoo! through a revenue sharing agreement on traffic generated on Yahoo!’s network of both owned and operated (O&O) and affiliate sites. + Microsoft will pay traffic acquisition costs (TAC) to Yahoo! at an initial rate of 88% of search revenue generated on Yahoo!’s O&O sites during the first 5 years of the agreement. + Yahoo! will continue to syndicate its existing search affiliate partnerships. + 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. + At full implementation (expected to occur within 24 months following regulatory approval), Yahoo! estimates, based on current levels of revenue and current operating expenses, that this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo! also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million. + The agreement protects consumer privacy by limiting the data shared between the companies to the minimum necessary to operate and improve the combined search platform, and restricts the use of search data shared between the companies. The agreement maintains the industry-leading privacy practices that each company follows today. aboUt icrossing iCrossing is a global digital marketing agency that combines talent and technology to help world-class brands find and connect with their customers. The company blends best-in-class digital marketing services — including paid search, search engine optimization, Web development, social media, mobile, research and analytics — to create integrated digital marketing programs that engage consumers and drive ROI. iCrossing’s client base includes such recognized brands as Epson America, Toyota, Travelocity and 40 Fortune 500 companies, including The Coca- Cola Company and Office Depot. Headquartered in Scottsdale, Arizona, the company has 550 employees in 12 offices in the U.S. and Europe. connect With Us Follow us on Twitter: www.twitter.com/icrossing Become a fan on Facebook: www.facebook.com/icrossing© 2009 iCroSSing. aLL rightS reSerVeD. 4