The decision by Yahoo to form an agreement with Google has been hailed by some advertisers, but smaller business owners are worried.
By integrating Google’s ads besides Yahoo’s search results, the secondary search engine hopes to profit to the tune of about $800 million a year. This is a sop to disgruntle shareholders still fuming about the missed opportunity to sell out to Microsoft.
However, there is concern among some that Yahoo is selling out more than the company by complementing its own program with the larger engine’s technology.
Users of Panama may be in trouble if Yahoo starts pitting AdWords against their own ad program. Costs could rise considerably for Yahoo advertisers as the Cost-Per-Click (CPC) goes through the roof for more competitive markets.
The hope seems to be that Yahoo will mostly use the Google ads for filler material, for less competitive areas of search, but there are no guarantees. Those who rely exclusively on yahoo based ads may find themselves out in the cold. To some this may seem no big loss, as Panama has constantly failed to measure up to hopes and dreams, but other depend solely on advertising through the smaller engine’s program.
One would expect the Quality / Index Score to be affected as well, and this is raising issues of just how helpful this arrangement will be to consumers and advertisers alike. A healthy dose of competition between businesses is imperative, but raising the competition to the level of two major resources slugging it out at the expense of the little fish – not cool.
There is a lot of controversy surrounding the partnership between Google and Yahoo, mostly due to anti trust issues, but the outcome seems fairly certain. After all, the benefits for the search engines themselves are many and lucrative!
The agreement between Yahoo and Google states that it will remain in effect for a four year initial term, with two three year options for Yahoo to renew if desired. If control of Yahoo were to shift in the next 24 months, Yahoo would have to pay a penalty of $250 million, less half the revenue earned by Google and generated by the agreement.
Interoperability between Yahoo and Google instant messaging features is expected to facilitate the process, and get people used to dealing with the combination.
Hopefully, Yahoo will take care of its own, and Google will be a welcome enhancement rather than a drain on Yahoo’s resources.
Tags: advertising, CPC, Panama, search