AOL Keeping Google (And Bing) On Its Toes For Search Deal Pick

AOL is currently gauging the offers of several companies to power its search as its $700 million-a-year deal with Google is set to expire in December. Whether it renews its agreement with Google or switches to another search company, AOL is likely to sign in its partner for the few years to come by September, according to various reports.

Google Vs Bing – Again
Speaking at the Fortune Brainstorm Tech conference in Aspen, AOL CEO Tim Armstrong said there were more than two contenders in the race for its search deal. “Search is heating up from a multi-partner space–we are not talking to two companies,” Fortune quoted Armstrong as saying. The most obvious two would be current search partner Google and its main competitor, Microsoft’s Bing. TechCrunch spoke of a “beauty pageant” between the two search firms that it also considers as those running “the only real competition” – a common belief further underpinned by the publication’s sources.

High Price
The existing AOL-Google deal is worth around $700 million a year so the bids for the upcoming tenure are likely to beat that figure more than easily. TechCrunch quoted a person familiar with the negotiations as saying that given the bid prices, “it may be cheaper just to buy AOL outright.” AOL is currently valued at $2.25 billion.

AOL Ad(vantage)
A combined Bing-Yahoo-AOL would grab a market share in excess of 30%, with AOL contributing 2.5% to the total figure. However, as we reported in January, click-through rates on AOL are twice those on Google, meaning that AOL’s 2.5% share of the search pie is in fact over 6% of total PPC market share.

One Or More Search Partners?
It’s not clear whether AOL will go for one single major partner or elect to combine several. But as far as the timeline goes for the new partnership, “we expect a deal to be done by September, based on information from sources,” TechCrunch said. It’s going to go very fast, notably because Armstrong said that advertising would be AOL’s primary source of revenues in his turnaround plan for the company.

Who would you bet on?