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Jun 14, 2008

NEWS: Yahoo Customers Pan Google Ad Deal

Yahoo Customers Pan Google Ad Deal

By Betsy Schiffman EmailJune 13, 2008 | 7:17:12 PMCategories: Google  

Yahoogle_2Just one day after Yahoo announced a plan to outsource some of its ad business to Google, marketers say they plan to cut their spending on Yahoo and take their business elsewhere. 

"As far as Yahoo goes, this [deal] will cannibalize their search business," says George Kepnick, an internet marketer and co-founder of DottedOnline. "The quality of the Yahoo pay-per-click system has gone down the drain, and it seems like they did [the Google deal] to bail out instead of listening to advertisers and figuring out how to fix the system. From the sound of it, this is terrible news for everyone."

Right now Kepnick estimates he spends about 85 percent of his marketing budget on Google; about 10 percent on Yahoo; and around 5 percent on Microsoft. Three months from now -- or whenever the Google-Yahoo ad agreement goes live -- he expects he'll spend 95 percent on Google and maybe 5 percent on Microsoft, possibly bypassing Yahoo altogether.

He's not alone. Internet marketing forums -- such as WebmasterWorld and Digital Point -- were aflutter with comments from advertisers who were trying to figure out how they'll be affected by the new deal. Some were optimistic that Google could help improve Yahoo's ad platform.

"I think Yahoo's system is flaky at best. Replacing any of it with Google ads is only a good thing for me. I'm sure your mileage will vary," wrote one marketer in a WebmasterWorld forum.   

Others declared it a decisive victory for Google.

"At any rate, this makes [Google's] AdWords even more powerful and they have been raising the minimum bids on keywords swiftly and steeply. Now your cheap clicks on Yahoo will be buried or replaced by higher-priced AdWords advertisers," said another marketer in the same forum.

And while it's all speculative now, marketers are already threatening to pull the plug -- or at least reduce -- their spending on Yahoo.

"My spend on Yahoo may go down if they're just going to serve Google ads," says Brian Waldman, a Boston-based internet marketer. "The more choices you have as a consumer, the more likely you are to have more competition and better prices . . . I don't know a lot of people in my industry who would look at the concept of bigger Google as a good thing."

It's bound to be a great thing for Google, though. Though the company has spun the agreement as a charitable deed, the deal will keep Yahoo out of Microsoft's clutches and could potentially grows Google's revenue.

"Why did we make this agreement? Quite simply, we think it is good for users, advertisers and publishers. By offering Google's industry-leading technology to Yahoo!, the whole system becomes more efficient, and everyone benefits," said Omid Kordestani, vice president of global sales and business development at Google, in an official blog post.

Because ads served on Yahoo will be sold through an auction system there's no way of knowing how the agreement could affect ad rates -- if at all -- but some marketers already argue that Google holds too much control of ad prices in the search market; when it tweaks its algorithm or reduces the number of ads on a page, rates on certain ads could rocket.

"In the search marketing community, we all want there to be a more equal spread between the three main search platforms," Waldman says.

Google-Yahoo Poses Ad-Rate Worries

Word Count: 668  |  Companies Featured in This Article: Google, Yahoo, Microsoft

Some marketing executives said they are fearful that a new partnership between Google Inc. and Yahoo Inc. may raise advertising rates while reducing control over where their ads are displayed.

But others cautioned that the impact of the deal -- announced Thursday as Yahoo ended talks about selling its search business to Microsoft Corp. -- remains unclear. They said a lot hinges on how Yahoo chooses to implement the complex agreement and whether Yahoo continues to give advertisers incentives, such as higher placements, for working with it directly.

"You have a lot of moving parts, and I don't think anyone ...

BRAND: Yahoo==Alice in Wonderland, a little lost

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