Microsoft and Yahoo! close search deal

Both Bing and Yahoo!'s paid search marketplaces are now combined into one Microsoft-powered platform. Does this level the paid-search playing field? Our media expert says no.

Does this make them frenemies?

In a joint announcement Wednesday, Microsoft and Yahoo! announced that the agreement to consolidate both companies’ paid search operations on one platform has been finalized, closing the final chapter on a deal that has been in the works since 2009.

Advertisers and media buyers can now access both the Yahoo! and Bing paid search marketplaces via a single Microsoft-powered platform called AdCenter. In Canada, the combined reach of the two search engines is, according to Microsoft, 15 million and in the US, the reach is an estimated 163 million.

The two companies have a tumultuous history, going back to 2008 when Microsoft’s overtures to acquire Yahoo! were rejected. Two years later, the mediacos struck a 10-year deal to combine their search business, the fruits of which were borne today.

The deal puts both Bing and Yahoo! in a more competitive position against search behemoth Google, which will benefit advertisers’ media strategies, Owen Sagness, VP and GM, consumer and online, Microsoft Canada, tells MiC.

‘The feedback that we get is that advertisers don’t want to have all their eggs in one basket,’ he says. ‘By combining our marketplace and by combining our search query volume, we provide a much more credible and much more significant alternative to Google in the marketplace.’

The deal will allow both products to deliver more value to clients as well, he adds.

‘Having a bigger ecosystem to work with allows us to tune the product and have more data and more insight, which means we can keep delivering better algorithmic results and better paid results because of that bigger base of intelligence about user behaviour.’

However, Rob Griffin, SVP, global director of search at Media Contacts, doesn’t share the mediaco’s excitement about the new product.

‘It won’t be nearly the impact everyone thinks it will be,’ he said in an email exchange with MiC. ‘I just don’t think the algorithm chains will make that much of a difference.’

Smaller scale advertisers will access Yahoo! and Bing paid search via AdCenter, while ‘managed accounts,’ or large-scale clients, will do business through Yahoo! Canada, Sagness says.

Yahoo!’s mobile search business will also transition to the Microsoft platform by the end of the month, although international markets will be transitioned over the course of 2011 for completion by 2012.