Three things advertisers should consider about Yahoo and Google’s deal

On October 20th, Yahoo announced that it had reached an agreement with Google that would give Yahoo the option of serving Google’s paid, natural and image search results on its owned properties and syndicated network. 

In addition to powering search through Google, Yahoo would retain the ability to power its search functionality through its partnership with Microsoft as well as through its own Yahoo Gemini search technology.  

First, a little background…

Back in 2009, Yahoo and Microsoft announced a deal in which Microsoft’s search technology would be used to power search results on Yahoo and its partner sites. The deal, dubbed the ‘search alliance’ allowed Yahoo to discontinue its own search technology and focus on ad sales. 

The alliance lasted about five years, until April 2015, when a new agreement was reached between the two companies. 

The product of the new agreement was that Microsoft would continue to power 51% of Yahoo’s desktop searches and Yahoo would power up to 49% of desktop and up to 100% of mobile and tablet searches. So far, Yahoo has powered its share of search traffic through the Gemini platform. 

Now what?

The new agreement between Yahoo and Google means that Yahoo has the ability to serve Google search results up to 49% of the time on desktop and up to 100% of the time on mobile and tablet. 

As part of the non-exclusive agreement, Yahoo reserves the ability to select which search queries it will serve via Google and is not obligated to serve a minimum number of search queries. 

The companies have agreed to delay the implementation of the deal until the United State Department of Justice has a chance to review it.  

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What does this mean for advertisers?

The changes at Yahoo will have implications for many advertisers. Here are the three key highlights for what we anticipate:  

1) Google’s search footprint will grow

With the new agreement, we expect to see Google’s search footprint continue to grow. Now it is even more critical that brands advertise with Google to ensure that their ads appear on two of the top three search engines.

We expect that this could further increase competition in Google search and advertisers could see an increase in CPCs.

2) Yahoo search will be bought through three separate engines

If your brand’s audience is on Yahoo (which it most likely is), you will need to buy search through three different engine platforms: Google, Bing and Yahoo Gemini.  

The challenge for advertisers is that volume will be segmented between Google, Gemini and Microsoft on a query-by-query basis… and there is no guarantee that it will remain consistent. 

Since Gemini launched earlier this year, we have seen some queries served almost exclusively through Bing, while others appear to be served via Yahoo only a fraction of the time. 

These ebbs and flows will make it difficult for advertisers to evaluate changes in demand and performance since Yahoo traffic may shift from one platform to another. It is recommended that advertisers test all three platforms to get a sense of volume and performance.

3) Budgets must be fluid between engines

As traffic ramps up and down between the three main engine platforms, advertisers must be quick to adapt to avoid missing opportunity and impression share.  

It will be imperative that search marketers stay on top of pacing and budget caps due to unexpected shifts from one engine to another. Budget estimates should serve as a starting point but marketers must be nimble throughout the flight of their campaigns and reallocate funds based on shifts in query volume between engines. 

For search marketers, change is the only constant in our industry.  As always, we recommend a test and learn approach and a flexible strategy that can adapt to unexpected changes in the search landscape.  

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