After Yahoo’s announcement that they had partnered with Google to display ads on Yahoo-owned content, it left more than a few of us scratching our heads. Now, in fairness, Yahoo is still going to display ads from other sources – such as Bing – the search engine that currently serves most of the ads on the Yahoo network. But for how long, nobody knows. It appears that the Yahoo/Bing relationship is souring and CEO Marissa Mayer has voiced her displeasure with the current deal.
It’s not a secret that Google and Yahoo have talked about partnering and allowing Adsense on Yahoo-owned web properties, but with Mayer taking over as CEO a mere six months ago and poaching Google employees faster than I can write about it, some conspiracy theories have begun to circulate.
Okay, conspiracy theory aside, here’s what it breaks down to… the once mighty Yahoo has been losing ground for several years to arguably better search engines. Instead of relying solely on search, Yahoo has begun producing content across a number of streams. When you make content, you need a way to monetize it in order to achieve any sort of value. This is where Google fits in. Google has the best and most targeted ads, so it seems a likely choice. Mayer being from Google had little to do with the deal other than perhaps helping her to broker a more favorable deal due to her Google connections.
The partnership makes sense for Yahoo, although it’s not without its problems for the long term growth of the company.
Displaying ads from one of Yahoo’s main traffic sources as well as a direct competitor is a move that leaves a lot of us scratching our heads. Of course, we’re not on the Yahoo board, and we’re certainly not Marissa Mayer, who’s nothing if not capable. All told though, it’s a bit of a puzzling move, and here’s why.
Google Is One of the Biggest Traffic Providers to Yahoo’s Foray into the Content World
At its most basic form, this seems to be a conflict of interest. After watching properties like About.com, eHow, Livestrong and others get banished from the search rankings after the Panda update, you have to wonder why Yahoo would make such a bold move as to allow another site to control their content. Yahoo Answers is one of the largest traffic-producing content properties Yahoo owns, and you have to think that a site with such low quality content is nothing if not bait for future Google updates. I love Yahoo Answers. Well, let me take that back, I love the idea behind Yahoo Answers. I like that anyone on the internet can ask a question and have it answered by someone who (hopefully) can provide insight. It’s the same idea that Quora was built on, albeit Quora does it much better, in my opinion at least.
Yahoo Has No Control Over the Ads it Displays
When you lose editorial control over the ads displaying on your site, you might as well carry around a billboard for a competitor. Granted, Yahoo was already in business with Bing, who was also a competitor, but Bing network isn’t nearly as large as Google’s and you can argue that displaying Bing Ads was a necessity if Yahoo wanted to avoid getting stomped on by the search giant. It makes sense. A strategic partnership between two top ten sites (according to Alexa and Compete) might be able to crack the nut that is Google and steal back some of the lost marketshare. I don’t think anyone could have seen Yahoo or Bing overtaking Google with this move, but with the third largest site on the web, it certainly didn’t make sense to partner with the company that was almost directly responsible for its downfall.
Luckily for Yahoo, Mayer has stated repeatedly that Bing was still set to serve ads on all Yahoo searches. If Google got their hands on that kind of search data, or that amount of traffic, it might be enough to sink both Yahoo and Bing in the long run.
Google and Yahoo are both big players in this industry and neither got to that position by being stupid. There’s more to this deal that we’re going to discover some time down the road, and whatever we find out is going to have huge implications on the future of the search industry. Mayer has stated repeatedly that Yahoo’s future was in the mobile realm. In fact, there are rumblings (okay, more than rumblings) that Yahoo is already considering purchasing Foursquare. Does this mean Yahoo is going to become a force in local search via mobile device? Did Yahoo make this move to put pressure on Bing to deliver a better deal? Is this the beginning of a Yahoo/Google acquisition? Are we overlooking the most simple answer; the one that begins with Yahoo producing more content and monetizing it better by utilizing ads that are more targeted than the ones Bing provides? Who knows?
Nobody on the outside knows for sure, but the next 18 months just got a lot more interesting.