PPC Ads: Analyzing the Bing Yahoo! Alliance
For the past three years, pay-per-click advertisers on Microsoft’s Bing have enjoyed distribution across both Bing and Yahoo! This is thanks to the Bing Yahoo! Search Alliance, which enables advertisers to use one ad platform for both search engines. While Google is still the king of PPC advertising, in recent years Bing and Yahoo! have made a dent in Google’s market share. comScore’s March 2013 search engine rankings showed Google with 67.1 percent market share, with Microsoft and Yahoo! having 16.9 and 11.8, respectively, both slightly higher than previous months. Some published reports claim advertisers on Bing have seen better results than from Google in certain categories.
Yahoo! and Microsoft each gave something up when they entered into the search alliance. Yahoo! gave up control of its ad platform. Microsoft conceded that it would never be a serious player in the search space unless it increased market share, which was in the single digits prior to the alliance.
So, the two struck a deal. Microsoft would own the ad platform and the advertisers, and would promise Yahoo! a certain amount of revenue per search. The idea presumably was that by combining resources, market share (and thereby revenue) would increase.
The deal was set to expire this year. But last week, Yahoo! and Microsoft renewed it for another year.
Let’s take a look at the events that led up to last week’s news. Prior to 2009, advertisers worked individually with Microsoft and Yahoo!. In fact, prior to 2003, Yahoo!’s paid search results were powered by Overture, which pioneered the PPC ad auction model, prior to Google AdWords. In 2003, Yahoo! bought Overture and eventually morphed the advertising platform into Yahoo! Panama, making it more like AdWords.
Meanwhile, Microsoft entered the search ad business in 2004 with MSN Search. This program enabled a maximum of three advertisers for any given keyword. Advertisers paid a flat, per-click rate — unheard at that time — and there was no bid management or keyword research. Advertisers had to work with a Microsoft rep to add keywords to their accounts.
Yahoo! provided ads to Microsoft on keywords for which there were no advertisers.
Then, in 2006, Microsoft launched its own PPC platform, called adCenter.
For the next three years, advertisers that wanted a presence in all three major search engines — Google, Yahoo!, Microsoft — had to use three very different ad platforms. For time-crunched advertisers, Microsoft was often the first engine to give up on, due to its dismally low market share.
Then, in 2009, Microsoft and Yahoo! announced the Search Alliance, although it didn’t officially launch until 2010. That’s when the revenue guarantee kicked in.
Yahoo! Wants Out
Although Yahoo! and Microsoft agreed last week to the extension, The Wall Street Journal reported that Yahoo! wants out of the deal. Microsoft has never net the revenue-per-search goal it promised Yahoo! back in 2010. Search Engine Land reports that Yahoo! CEO Marissa Mayer is unhappy with the deal, claiming that the results are below expectations. Mayer, a Google employee until 2012, has indicated she feels that Yahoo! should be doing better than it is, and that changes are on the horizon.
Still, Search Engine Land speculates that Yahoo! will never leave Microsoft, because it lacks the technology to run a PPC program on its own. Indeed, technical challenges were a barrier to using the old Yahoo! Panama system — it was poorly designed and clunky.
Still, Yahoo! continues to make moves toward search independence. On Tuesday, Yahoo! announced the expansion of its relationship with Chitika — an ad network — into mobile search ads. While this move currently benefits Bing advertisers, too, some speculate that Yahoo! is using the Chitika relationship to strengthen its own position in search advertising.
On the heels of the Chitika announcement, Yahoo! said on Wednesday that it was launching new tools and upgrades for search advertisers. While details are sketchy at this time, it seems as though Yahoo! is indeed trying to develop partnerships that will position a future split from Microsoft.
What Does this Mean for Advertisers?
At this point, all of this means nothing new to advertisers. If you’re using Bing ads, and you’re getting good results, keep doing so.
If you’re not using Bing ads, you should consider them. There are many advantages to advertising on Bing. I’ve addressed them here previously, in “Pay-per-click Advantages on Bing.” Fifty-one million unique searchers on the Yahoo! Bing network don’t use Google at all. And Bing shows strong performance in several important verticals, including financial services, computer and Internet, and business. Often, Bing ads have fewer competitors and lower cost-per-clicks than Google.