Google Tries to Explain Their Deal With Yahoo!
Google Tries to Explain Their Deal With Yahoo!Sep 29 2008 - Business, PPC, SEM - Farhad Divecha
The Googleâ€“Yahoo! deal has ruffled the feathers of several advertisers and publishers. In an attempt to try and smoothen things Google has launched a ‘facts site’ and a presentation consisting of 17 slides, which try to explain the significance of this deal.
Google has tried to prove that this deal will not only be harmless, but will actually be beneficial for the industry. They have highlighted various details of the deal, which they feel should be of interest to advertisers and publishers and should lay any doubts to rest.
According to Google, this deal does not violate antitrust laws of the U.S. constitution in any way, as it is similar to several other deals in industry, such as the deal between Toyota and Ford – Toyota provides hybrid engines for Ford – or the deal between Canon and HP – Canon provides laser printer engines for HP.
Regarding the fear of ad prices going up, Google keeps using the same old argument that the prices of ads are not manually set, but are decided by an auction process, whereby prices are never fixed and an advertiser will never bid to pay more than a keyword is worth. However, as Silicon Alley Insider points out, they have stopped short of actually saying that ad prices will not go up as a result of this deal.
In a market where there is only one dominant player, all advertisers will end up competing for the same ad spots and this will drive up bid prices, whether one likes it or not.
Consumers will will benefit from this deal as they will see more relevant ads while searching on Yahoo! and the interoperability between Yahoo! Messenger and Google Chat will mean better communications.
In theory, website publishers too should be pleased with this deal as better ad matching technology could increase their revenue and advertisers could find new ways to reach their target audience. However, if the publishers have only one supplier controlling almost all the traffic volume, this puts them at a great disadvantage when bargaining for better rates.
The serch giant keeps reminding users and litigators that this deal is not a merger and does not remove Yahoo! from the field and that since the deal is non-exclusive, Yahoo! can continue to make similar deals with others. It is true that Googleâ€™s share of search traffic will not increase with this deal, though, they fail to mention that the share of search traffic their ad platform serves will definitely be increased.