- July 25, 2016
It’s the end of the road for Yahoo as an independent company. But is it just the beginning of a resurgence in their importance to Pay Per Click (PPC) advertisers and Search Engine Optimization (SEO) specialists?
Quick backstory: Verizon just announced a $4.83 billion acquisition of Yahoo’s core web properties and content. This positions Yahoo alongside AOL in Verizon’s portfolio of online media companies.
No matter what, it’s going to be a prickly integration. Digital marketers are paying particularly close attention as the acquisition will create challenges and new opportunities.
This matters for a few reasons:
Yahoo and AOL have tremendous combined traffic
As content companies first, and search engines second, AOL and Yahoo have a combined monthly unique user count that is higher than Google’s. However, monetizing and activating their large user bases has presented problems for both companies, which led to their relatively low valuations.
This represents a significant opportunity to build and integrate an enormous content network for display ad campaigns if they can combine the best of their advertising operations, sales channels, and targeting capabilities.
Ad targeting is nearly limitless when you are owned by an ISP
Verizon’s role as an Internet Service Provider (ISP) gives them a leg up over other ad networks simply because they could combine their content-based targeting with the rich knowledge they have of each subscriber.
Account info, browsing habits, media consumption, purchase behaviors, and geo-location could become even more accessible to advertisers who wish to target customers on a 1:1 basis.
Combined search engine operations create more negotiating power
Yahoo hasn’t run their own search engine for years, at least not in a meaningful way. Since 2010, Yahoo’s search results have been powered by Bing and, more recently, split between Bing and Google (depending on the query type and device used). Their paid search ads are split among Google, Bing, and Yahoo’s Gemini platform.
AOL’s paid and organic search results are also powered by Bing.
Neither Yahoo nor AOL has significant market share for U.S. searches (combined desktop share is less than 15% in most rankings), but given their patchwork quilt of organic and paid search providers, consolidation could favor Bing or Google.
If Verizon/Yahoo/AOL were to partner exclusively with Google or Bing, it would lessen competition for search users. Fewer search providers would theoretically drive up the average Cost Per Click bids for paid search advertisers while simultaneously increasing competition for organic search results.
Verizon/Yahoo/AOL could develop their own search engine to compete with Google and Bing
Going head to head with Google and Bing is less likely, but it could create a viable third provider. However, Google and Bing have an advantageous head start, and efforts to supplant them have created a long line of search “has-beens.”
Were this to come to fruition, I would expect an overly commercialized, less user-friendly, and more biased toward Verizon-owned content search experience.
In conclusion: more competition is a good thing
I have long advocated for more competition in the search engine market. Consumers win with more selection and aggressive innovation. Brands win with more opportunities to better target consumers, less wasted spend, and better user experiences. And, of course, search engines and media companies win by improving the return on their advertisers’ campaigns, which in turn can command higher prices.