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Yahoo and Bing: Four Months Later, Two-Tenths Lighter

One Milestone Down, Many More To Go

Tuesday, December 8, 2009 | Posted by Aaron Goldman

Posted In: Press / Press Mentions

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Last week brought news that Microsoft and Yahoo officially signed the contract to have Bing power Yahoo search. I, like many in the space, thought that this already happened when Ballmer and Bartz used that goofy oversized Yahoo pen back in July to sign a stack of papers. Turns out that was just a letter of intent.

While this is an important milestone in the Bingoo saga, there are still a number of interesting plotlines that need to play out. I shared this POV with MediaPost for its recent coverage of the deal. More analysis follows the excerpt.
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"Even with the agreement done, we're still a long way from actually seeing Bing search results on Yahoo," says Aaron Goldman, managing partner at Connectual. "The deal still needs to be approved, and then implementation begins. By the time it all comes together, Yahoo's share of search will have eroded even further, making this a less lucrative deal for Microsoft."
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As I predicted, the Yahoo/Microsoft deal has actually been good for Google. Yahoo has lost more search share since the Bing launch than Microsoft has gained -- 0.2% net loss.  Meanwhile, Google is up overall with a 0.4% net gain. For complete tracking of the search share game, see my digital marketing blog.

The bottom line is that Yahoo, knowing that Bing will someday power its search and bring guaranteed revenue from Microsoft, has little incentive to continue innovating in the space. Google, on the other hand, is releasing new features nearly every week.

And let's not forget that the heavy-lifting for Yahoo and Microsoft has not yet begun. Only after the deal passes regulatory approval will the integration begin. At that point, it won't be only Yahoo taking its eye off the ball. Microsoft wlll be busy porting its platform over to Yahoo and figuring out how to realign sales and operations personnel. This will only further help Google which already has a well-oiled machine serving AdWords to the masses.

To be clear, I'm rooting for Bingoo. I think the industry needs a strong competitor to Google. I'm just afraid that by the time this thing finally comes together, we'll be looking at an even more unequal distribution than we have today. In other words, as I told the NY Times when the deal, er... letter was first announced, it may very well be an 80-20 game instead of 70-30. And we'll be right back to where we started.