What a Microsoft Acquisition of Yahoo Means to Webmasters & Web Publishing Business Models

Feb 1st
posted in

As a person who has studied search for many years I thought I would analyze how I thought a Microsoft acquisition of Yahoo could change online publishing and internet marketing strategy and business models. This post assumes that the purchase goes through with Yahoo's board and regulators, and that the underlying search architecture and ad platform of Microsoft is used rather than Yahoo's current mess.

Organic Search

  • Yahoo! Search is stale. They place way too much on user generated content and worthless tag pages located on sites with a high authority score. Microsoft Search makes it much easier to rank pages on lower authority sites so long as they have fresh inbound links.
  • Like Google, but unlike Yahoo, Microsoft places significant weighting on domain names in their relevancy algorithms.
  • Microsoft closed their small business directory. Many of Yahoo's regional directories no longer accept paid submissions. It is uncertain what parts of Yahoo might get killed off in staff cuts before and after the acquisition. Submit to the Yahoo Directory while you can.
  • Yahoo Shopping and Microsoft Shopping are two of the bigger shopping sites clogging up Google's search results for many queries. A potential merger of these could help the top one rank better while freeing up space for other competitors.
  • Yahoo places 4 ads above the fold for commercial searches, driving down organic search results. If Microsoft buys them and runs fewer ads to win marketshare that allows more of the organic search results to receive a solid stream of traffic.
  • Yahoo offers a paid inclusion program to sell rankings in their organic search results. If Microsoft buys Yahoo I believe that program will be phased out as it is hard to image that it makes as much profit as it costs in public relations damage, especially if Microsoft intends to catch Google in search.
  • Yahoo! News is the leading news site on the web. If Microsoft combines that asset with default installed desktop widgets on Vista they can further enhance that market position.
  • Microsoft is bad at following 301 redirects, but they have had that problem for a while, and one would hope they would get that fixed prior to powering Yahoo! Search.

SEO Recommendations

  1. Spend some time tracking rankings in Microsoft to better learn their relevancy algorithms if you have not yet studied them.
  2. Ensure your website has a fresh content strategy or reason to keep picking up new links.
  3. If possible, when starting new projects, try to build them on domain names that match your primary keywords.
  4. Submit to the Yahoo Directory while you can. If the Yahoo Directory dies off it may create a hole in the market leaving a profitable business model for another directory or even a site like Mahalo to take its place as a leading generalist editorial catalog of websites.
  5. If domain authority (i.e.: running few large sites) was a big piece of your search strategy creating numerous smaller niche sites once again became a profitable strategy.
  6. If you were reliant on paid inclusion for traffic that traffic stream may dry up, so your best off learning about Microsoft's ranking algorithms ASAP.
  7. Check to see if your site meets the requirements to be included in Yahoo News.

PPC Ads / Paid Search Advertising

  • Yahoo! Search's ad platform is still exceptionally clunky. In spite of being recently upgraded they still do not have a public facing keyword tool and only let most advertisers use their keyword tool while they are in the middle of creating a search campaign. Microsoft, is much more open and innovative with their ad platform and advertiser tool set.
  • Google has been hoarding data for years without giving much of it back to prospective advertisers. When Yahoo upgraded to Panama they followed Google's path. Microsoft recently launched an Excel ad plugin that shares a ton of useful data with advertisers. If Microsoft buys Yahoo! their data will become more accurate and likely force Google to show more aggregate advertiser data.
  • Ad campaign management gets easier because advertisers only need to maintain two ad accounts, which might make self-management of search campaigns more practical for small businesses.

Pay Per Click Ad Recommendations

  1. Open an adCenter account using this coupon code for $50 in free ads, and set up your adCenter account to get used to their interface and ad platform.
  2. Use the Ad Intelligence plug-in to see how sweet it is.

Display & Contextual Ads

  • Microsoft purchased aQuantive earlier this year to own large scale display ad serving capabilities.
  • Yahoo has more pageviews than any other website. If behavioral data has hidden latent value they should be able to leverage it across their network and partner websites.
  • This merger will likely take YPN out of perpetual beta, creating a credible alternative to AdSense, which will increase the share paid to smaller publishing partners.

Display & Contextual Ad Sales Recommendations

  1. Display ads likely to fall in value due to recession, and a glut of inventory from social media and other websites, so I still like higher value businesses that remove greater friction from commercial transactions when possible. The one exception to this belief is in game ads, which I see as having a lot of upside if you can publish games good enough to attract a large audience.
  2. The combining of the Yahoo and Microsoft ad networks should create many arbitrage opportunities.
  3. If you have a site that profits from AdSense it is in your best interest to try Microsoft's network after it launches. Odds are that Microsoft will be willing to give publishers a large share to win marketshare, and giving Microsoft a try will help them create a more robust network which forces Google to increase AdSense payouts.

International Search

Short term I believe this acquisition is about gaining momentum in the US market. But Yahoo is strong in Japan. They also have significant market coverage in Spain, South Korea, and China. Microsoft has notable search share in some European countries. Both have about 4% marketshare in the UK. You can learn more about international search by downloading this 2007 Global Search Report [PDF].

I think a solid strategy going forward for Microsoft to gain search share in foreign markets is for them to offer their operating system free or at a reduced price for bundling search in the desktop. They already give away operating systems in exchange for feedback or exposure.

If the Microsoft purchase of Yahoo clears, expect Google to start distributing a Google flavored version of Ubuntu to the general public before the year is out. Inside of 5 years Microsoft's operating system will be free or irrelevant.

If you want to read the documents that started Microsoft's major push toward web search they are here and here.

Danny Sullivan offers some great coverage of the deal here

Published: February 1, 2008

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Comments

February 1, 2008 - 11:35am

Hi Aaron,

what surprises me is that you don't make any statement whether you think this is good or bad news and whether they will have a real shot at being serious competition for Google. What's your guess?

February 1, 2008 - 12:19pm

I think they will probably fumble it quite a bit, but this and other moves should start giving Google a bit of competition that improves the respect information aggregation companies give webmasters.

February 1, 2008 - 1:03pm

Great article Aaron. Provided some useful insight.
Combined with this -another change coming that I noticed yesterday.
ICANN has decided to discourage the practice of 5 days domain tasting. I think that would give SEO domainers more chances to compete. Combined with coming recession and credit crunch, it's likely to create more opportunities for quality domains to come into the market. Further, MSN+Yahoo may give SEO domainers another reason to be bullish on SEO domaining. Looks like a good start for 2008.

February 1, 2008 - 1:27pm

I would caution that as more people start leveraging domains and the signal of quality goes down Google could easily pull a little weight off of them and then look at other signs of brand legitimacy to give a similar boost.

February 2, 2008 - 10:42am

Best round-up I have seen, Aaron. I'd want to know the answer to Patrick's question, too -- do you think they will be able to legitimately threaten Google's position?

February 2, 2008 - 12:38pm

Hi David
I think that they probably will not beat Google at search (as much a branding issue as anything else honestly), but they can win enough marketshare to help keep Google more honest.

February 3, 2008 - 6:14pm

Hey Aaron,
Once again I was able to count on you to give me some quick good insight into current search engine news. Thanks a ton. I have a questions. I noticed you have all your blog posts under the root area of your site (i.e. they are just /post-title) instead of under /blog/post-title. Is this for SEO purposes? Or just how it worked out? If it is SEO how would Microsoft's search engine respond to it.

Thanks,
Matt

February 3, 2008 - 10:22pm

I don't suppose I would gain anything out of putting blog in all the URLs. Drupal allows you to configure if you want to put a path in all your URLs or not.

February 3, 2008 - 11:56pm

You really think Microsoft's Search and PPC products are better than Yahoo's? Have to disagree there.

I find Yahoo search much harder to manipulate and more relevant than MS. To me, that means it's the more advanced algo.

Panama isn't perfect, but it's a huge improvement over Adcenter. Microsoft's user-interface, reports, and layout drive me crazy. Some of their biz decisions, like disallowing extremely relevant keywords, then spamming customers about it really make me question their ability to manage a combined system.

February 4, 2008 - 12:06am

I find Yahoo search much harder to manipulate and more relevant than MS. To me, that means it's the more advanced algo.

If you just posted your content on an authority domain and pointed a few links at the page you would see the Yahoo algorithm is not that advanced.

Lots of junk tag pages that have no utility to general internet searchers rank high in Yahoo!'s current relevancy "algorithm". :)

February 4, 2008 - 12:02am

It surprises me to see you refer to Yahoo's index as being stale. I have found the complete opposite, with Microsoft being the search engine found wanting...
Out of 500ish pages on 3 sites, Microsoft only has about 60 of them indexed, while Yahoo has all of them, plus some, (damn dups... heeh j/k).
I really hope that if the buyout does happen, they end up using Yahoo's index. MS has what, 9% of the search market? Maybe because they only have 9% of the Internet indexed. ;) Yahoo's SiteExplorer is leaps and bounds ahead of Live Tools, and even on par with Google because of the great back link details Yahoo provides.
I like Microsoft, as an OS. I run XP, with IE7, and MS Office 2003, (soon 2007), but web-wise, I think the best thing they could do is bring Yahoo to their campus, and not intergrate, but use exclusively.
These are definately going to be some exiting times ahead, and thank goodness I will only have to optimize for 2, not 3.

February 4, 2008 - 12:04am

I think Yahoo! is good at indexing lots of content, but is poor at

  • duplicate detection
  • mixing in newer and smaller niche sites against established sites
  • realizing that user generated content on authority sites is often garbage
February 4, 2008 - 12:17am

realizing that user generated content on authority sites is often garbage

Kind of like the relationship between Google and Wikipedia?
heeh.

February 4, 2008 - 2:21am

Aaron:

I'd be curious to see you blog your impression of Google's official response to the takeover bid (which they seem to term as "hostile" (?))

They commented on the Google Blog here

February 4, 2008 - 3:53am

Really well written piece Aaron and also thanks to Geordie for that Google link, very interesting that they chose to post that considering everything that is in the air at the moment regarding freedom on the net.

I agree that it will force Google to become a little more competitive and flexible but I also agree with Google's own comments that M$ controlling that many email and IM accounts is scary.

How long before MSN and Yahoo search only rank asp sites?

February 4, 2008 - 11:46am

I knew you would comment on this, of course you would. But a good article like this one takes time to write, so I guess that's why it didn't come out early. I saw the same thing on other SEO websites. Congrats! Good job.

February 4, 2008 - 11:12pm

Aaron, I decided to have a little fun not quite at your expense, but brought it back to this particular post. :)
Have a good one...
http://www.youfoundjake.com/2008/02/04/unless-youre-aaron-wall-does-it-r...

February 5, 2008 - 5:14am

Great article, Aaron. I was almost going to miss it due to some issue with google rss reader (or with your feed?).
I definitely think the deal will be good for webmasters if it happens. Yes, Microsoft may become a bit too powerful, but better have two big players than one oppressor.

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