Microsoft sat back while Google showed everyone how to take a search engine from 2 kinds having fun to a top 20 American company. How did they do it? Well just look at their revenue numbers and you will see a massive percentage comes from the Adwords & Adsense products. Now Microsoft is trying to get into the online advertising game but can they hope to compete without acquiring Yahoo and their volume? I think Microsoft will make a move at Yahoo and its going to happen in 2007.
Here are 10 reasons why:
1. The search algorithm… duh… Microsoft’s horrid search algo is by far the single biggest problem that Microsoft has right now. The problem is that when there are no users using the search engine then there are a ton of ads that never are shown. If Microsoft were to acquire Yahoos search algorithm this would be a GIANT step in getting users back.
Overture Yahoo Search Marketing. Microsoft used to broker every thing through the company formally known as Overture for showing ads on msn.com search. They are now trying their own company but its chugging along at a very slow pace. Most advertisers like Microsofts Adcenter but agree there is just not enough volume from its search engine (see #1).
3. Yahoo Publisher Network – YPN IMO is the best contextual advertising network there is. They have a great quality control team and also a REAL PHONE NUMBER THAT REAL PEOPLE ANSWER if you have contextual questions. Nobody provides the level of customer support in regards to contextual advertising that Yahoo Publisher Network does.
4. Flikr – Again Microsoft may have a similar product but the volume is here. Boom another zillion people to market to.
5. del.icio.us – While Google is signing up or buying all the 2.0 advertising space Microsoft can acquire a huge name right here.
6. The People – Microsoft has tons of stale old people who do not understand this new industry. They are starting to just now contribute to rival open source projects like Zend and Mysql. Acquiring Yahoo people like Jeremy Zawodny (who wrote a book on Mysql and also contributed tools to the project). Microsoft realizes that they are not only losing ground in the search industry fast but they also lost market share in server technology to Zend (PHP) and other open source products. If they want to keep their market share with Windows Server I think bringing in a lot of these brilliant Yahoo developers would keep them on the right track in making sure they integrate well with the open source items.
7. Video – Between Yahoo Video and Microsoft’s Soapbox They might be able to combine for a decent share of the video market. Why is the video market important – 2 words – video advertising. I took part in the beta test when Google did a trial run of video ads and then 2 months later they buy out youtube… ya… video advertising. Ad Volume ++
8. Community properties – Yahoo has yahoo groups whose numbers rival Myspace. Never heard of groups.yahoo.com ? Ohh yea you forgot about that huh? Instantly you have millions of people to show more ads to! Ad Volume++
9. Business Directory – Microsoft Just gave up there Business Directory efforts. Yahoo has always rocked it with their paid inclusion directory. Its by far the most respected business directory on the internet. Even at 300$ per year fee webmasters line up all day to submit there websites. Mean while Google’s Business directory is a laughing stock being powered by the corrupt DMOZ.
10. Yahoo Just cleaned house. It seems to me this makes a merger that much easier with less chiefs to merge.
Will it happen? To me it seems like a no brainer… If Microsoft hopes to compete in this new internet economy (contextual ads) they need a bigger chunk of the search market. Yahoo is the only option IMO.