Techcrunch has just announced that Google & Yahoo intend to do a partnership around search. This is a great move by Yahoo, as they clearly did not do a good job with Panama (Yahoo Search Marketing). I was one of the search marketing experts that assisted the guys at Yahoo back in 2006 with planning Panama, and not many of my suggestions back in 2006 were followed. They thought they knew better…evidently not!
So, what’s is Google going to do with Yahoo? The right thing! The key to Google’s success is global distribution and billing (any customer, any language, any time, any country). Google will consolidate all the Yahoo marketplaces in all the different countries, and enable anyone, through a central interface, to bid on search terms from one central location. Yahoo should have done this from day 1, and Microsoft hasn’t realised this yet either. The politics around setting up a different “market” for each country clearly overcome good business sense by both Yahoo & Microsoft. Google did it right. This was the critical flaw in Panama. It just took too long to roll out a separate market for each country and then they didn’t achieve any of the benefits that a large advertiser base could achieve, across different markets. In other words – they reduced the Return on Effort for advertisers.
The problem with CEO’s such as Steve Ballmer & Jerry Yang, is that much of the knowledge around their advertising systems lies with Product Managers, and technical folk that are much closer to the customer and this information does not float up to the top. They are too far removed from the detail to understand how to run a good search operation – it’s not their fault, it’s just how large organization works. Google is so efficient at extracting value from search, and have been doing it for so long, that unfortunately, hiring a product manager with 5 years experience in search just won’t cut it.
As I said before in this post (2 years ago), Microsoft & Yahoo will never beat Google unless they understand first principles of search marketing as a business and industry – and as yet, I’ve not been proven wrong. If anyone has Steve Ballmer’s email, tell him to give me a call and let him know that I’m more than happy to help him fix AdCenter – no charge!
Update: Ok – now this proves how dysfunctional Yahoo’s thinking around search is. The announcement was just made and it only applies to US & Canada. Google is obviously happy to get a foot into the door without taking the rest of the world with them. It’s not a complete takeover of the search function, but more of a supplement to their own efforts with Panama. I’m very interested to see how this will be implemented, and if foreign searchers will see their local results on Yahoo.com (i.e. if they are not in a local Yahoo site).