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Yahoo! surrenders to Google’s popularity

Posted in Advertising, Digital, Arif Durrani, Latest reporters' blogs June 19th, 2008 by Arif Durrani

There’s been a touch of playground posturing in cyberspace this week. Yahoo!’s decision to partner with head boy, and former arch rival, Google for a new advertising inventory in North America is a telling indictment of the surrender of power online.

The new alliance will see Google Ads appearing on Yahoo!’s search results in the US and Canada from September and, some analysts suggest, signals the first steps to a full takeover of the playing field.

It’s easy to forget that Yahoo! is the web’s oldest search engine, although still a spotty teenager itself, the 14-year-old directory was once cock of the walk that set the pace online.

Google by comparison is not even 10 years old until September and yet can anyone imagine an online world without it?

Oliver Bishop, chief executive of digital agency Steak notes that Yahoo! once helped build Google and now Google is returning the favour. He believes the deal highlights how competitors, as well as distribution partners and advertisers, now all rely on Eric Schmidt’s outfit to survive.

The deal does not apply to the UK yet, but it is only a matter of time according to Arjo Ghosh, CEO of iCrossing UK. He warns that Google’s monopoly stranglehold on the digital market is growing with every deal.

More ominously, Ghosh believes the repercussions of the deal, if approved, will not be confined to the search market but will also impact any plans for a single ad platform across all online formats.

“Google stands to become the dominant media owner, but without the experience, regulation or monitoring present in the traditional segments such as television,” he warns.

The new partnership also comes at the expense of the boy who’s been noticeably quiet of late; science wunderkid Microsoft, has yet again failed to be picked for the team. No matter how hard the company tries, it is finding it hard to fit in and looks destined to standby while his classmates increase their share of the search spoils.

Simon Norris, founder of paid search expert Periscopix, also claims it’s a bad result for Yahoo!, calling it a “tacit admission” that its own ad serving system Panama has failed to hit the mark.

Launched in 2007, Panama turned out to be little more than an inferior copy of Google’s long-established system, says Norris, who also expects Google to keep a sizeable proportion of the revenue generated from the ads.

Regardless of the speculation, both Google and Yahoo! see value in the deal and seem remarkably convinced it will not hinder competition.

Ivan Izikowitz, managing director of Clicks2Customers, is yet to be convinced by the long-term game. Some insiders have mooted the ability to manage and deliver campaigns on both Google/Yahoo without using Panama. The implication, according to Izikowitz, is that advertisers will end up paying Google prices as an intermediary for placement on a different channel, something he calls “nothing short of ridiculous”.