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Google/AOL Search Deal Ending, Big Interest In New Partnership

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The AOL/Google search partnership agreement is ending this year and according to AOL CEO Tim Armstrong the company will be looking for the best possible deal, though Google will get "firsts dibs", according to the Wall Street Journal.

Initial reports had Armstrong stating the new partnership was open to the highest bidder, but the Wall Street Journal updated their online story to state that Google had "first dibs" - suggesting there was an option in the previous deal with Google.

Microsoft is interested in the partnership to increase its market share and AOL could "get the same economics from a new deal", Armstrong said according to WJS.com.

AOL has about 2.9% of the search market, according to comScore, and would help push Microsoft over 30% when combined with their Yahoo deal. Google holds over 65%.

The added interest in AOL comes from its high click thru rate. AOL searchers have the highest CTR of all engines according to Chikita, Their CTR for ppc ads is over two and half times that of Google. Given the engines monetize through paid search the numbers become interesting.

Bing (1.74) and Yahoo (1.37) also have significantly higher CTRs compared to Google (0.98).

These higher CTRs would give Microsoft a chance to compete with Google in the one area where it counts - revenue. Interestingly, just like searchers, many advertisers just use Google - though in my experience there are better CPAs using the other engines. Since there are fewer advertisers the bids are lower - this may not be the case in the future if advertisers become aware of these figures.

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