Disclaimer: The opinions expressed in this article are strictly my own and do not necessarily reflect the views or values of my employer, associates, or other parties.
Microsoft and Yahoo! announce search partnership
By now you must have heard that Microsoft and Yahoo! have finally reached an agreement on sharing search technologies. On the surface it must seem like a cool deal. Yahoo! used to partner with other search services in the past, including Inktomi (which Yahoo! bought), Altavista (which Yahoo! bought), and Google (which Yahoo! has yet to buy).
Microsoft’s recent launch of the Bing search service signalled the next level of Microsoft’s commitment to Web search, a commitment that I have never really doubted since Microsoft relaunched its Web search as Live.com three years ago. Despite heavy skepticism in the search marketing industry, skepticism which is partly influenced by what I feel are bogus search market metrics, Microsoft proved over the past month that it can indeed move the marker at least a few notches.
People rapidly concluded that Microsoft was taking market share away from Yahoo! and more than one person in our industry had suggested this might break the ideological deadlock between Microsoft and Yahoo!. Microsoft has tried twice to buy Yahoo! outright, failing both times. Yahoo! has reluctantly committed to staying involved in Web search, once even proclaiming it was proud to be second in the search market (actually a decent accomplishment when you consider that nearly 100 companies compete for search market share at any time).
How Should Competitors Compete For Market Share?
Here’s where the rose-colored glasses start to slip off the face of reality, however. Neither of these companies has a good track record when it comes to actually competing for market share. In the early 1990s Microsoft squeezed out other PC operating systems by writing hundreds of exclusive contracts with PC manufacturers that locked them into installing only Microsoft DOS (later Windows) on their machines. In the early 2000s Yahoo! bought its way to the top of the search market by acquiring search properties like Altavista and AllTheWeb, absorbing their shares into its own.
Neither company actually offered a superior product — they simply strong-armed their competitors out of the way and forced consumers to look at as few choices as possible.
And that is exactly what these two giants are trying to do again: eliminate consumer choice. This time, however, they are doing it on two levels. And there is a lot of money at stake, so it’s not hard to imagine possible motives for why they would take this approach.
Search Market Share can be measured in at least four ways:
- Number of Queries Performed (essentially, number of Page Views)
- Number of Visitors (essentially, size of audience)
- Number of Sites traffic is sent to (essentially, size of useful inventory)
- Number of Referred Visitors sent to other sites (essentially, number of Web search conversions)
In the past I have argued that the Number of Referred Visitors (search conversions) is the best metric for measuring Search Market Share. Why should you or I care how many Google visitors click through to Google properties in Google’s search results? We don’t realize any benefit from those clicks.
Unfortunately, the search engines don’t publish their search conversion data and there are no credible third-party sources of data (note: Compete.com offers to sell its research into this area at a very high price).
Why Search Market Share Reports Are Irrelevant
We presently must rely upon companies like Compete, comScore, Hitwise, and Nielsen to measure search market share, which they do only in terms of Number of Queries Performed. This is a horribly skewed metric that only works in one sense: for potential advertisers (who may be considering Run-of-Network or Broad Match advertising purchases).
When you are selling online ads, Page Views matter most. Ideally, people want lots of Page Views with high Click-Through Rates, but ask any advertiser if they’ll take a 5% CTR on 100,000 page views over a .01% CTR on 6,000,000,000 page views. It’s not hard to see where the money will flow.
Today’s search market is actually an advertising market, but it’s an advertising market that relies heavily upon gauging the relative value of only a small amount of available inventory. The reason most available inventory is not considered is that it is not consolidated through a single technology. So we measure search market share through Lazy Metrics.
In fact, we speak about “search market share” but what we’re really referring to is Search Service Advertising Inventory Share.
How SEOs Fail To Optimize For Search
Most of you, however, set your organic search optimization priorities on the basis of Number of Page Views — an irrelevant metric for organic SEO because it doesn’t filter out the wasted Page Views (mostly informational queries such as telephone and address lookups), the in-system search conversions (e.g. Google to Youtube, Bing to MSN, Search.yahoo.com to news.yahoo.com, etc.), and other value-siphoning factors that carve opportunity away from your search listings.
By focusing on the irrelevant metric of Search Engine Page Views, you reinforce the belief that neither Yahoo! nor Microsoft matter — this despite the fact that more than 160,000,000 people use their search services every month (compared to about 145,000,000 Google users). So where do your organic SEO resources go? Many people in our industry proudly announce they do absolutely nothing to optimize for Microsoft and Yahoo! — and they justify that decision by pointing to the fact that they get no traffic from either search service.
The bottom line here is that if you refuse to optimize for any search engine other than Google, you’re only going to do well on Google — and yet you have no way of knowing how much traffic you’re walking away from by ignoring other search engines.
The High Cost Of Search Marketing
Google, Microsoft, and Yahoo! all currently operate their own search databases, tools, and algorithms. Ask.com is a fourth player in the field of significant search technologies. I have to compare search results across multiple services on a daily basis for customers and I assure you that the search results do not look identical. In most cases there are substantial differences across the search services.
Furthermore, once you go beyond fundamental search engine optimization principles, relatively few tactics and techniques work equally across all the major search engines. You have to develop resources and tactics for each engine. This becomes a cost-prohibitive exercise for many Web marketers.
I’ve talked with many people through the past few years who simply don’t feel they have the time or money to optimize for more than one search engine, so they focus on Google. In a 3-4 service market that argument holds up pretty well under scrutiny. But if you assume for the sake of discussion that Ask is not yet large enough to matter to most search marketers, combining Yahoo! and Microsoft search services suddenly changes the picture.
Now you’re talking about optimizing for no more than two search services and you’re almost doubling the scope of your potential market. It makes financial sense to Web marketers to stop obsessing over Google and take Microhoo seriously.
And That Hurts Consumers
By eliminating one of three popular search algorithms, consumers who dislike both Microsoft and Google search will have to choose something else. Most of them will choose either Microsoft/Yahoo! or Google. This is where the Clayton Act, an antitrust law, comes into play. By eliminating competition and reducing the number of reasonable options available to consumers, the Microsoft-Yahoo! alliance may be violating the law.
But let advertisers beware: with Microsoft and Yahoo! sharing search advertising tools and marketing, they hope to consolidate their inventory and attract more bidders to their combined auction system. The more bidders they get in their combined auction system, the higher the costs of acquiring leads will become. We’ve seen this effect work time and time again across Google and Yahoo! pay-per-click advertising.
In fact, it was pay-per-click advertising that really taught the SEO industry the need to measure return on investment. I remember people buying PPC ads in the early days for $1 apiece and they got maybe 1 conversion (sale) out of 100 clicks. If they made a $100 profit on that sale, they broke even. Most of those folks were making considerably less on their sales, but they were “building brand value” so they were willing to absorb the losses.
How many businesses today are willing to take that kind of hit on their advertising budgets? Darned few, in my opinion.
Hence, it doesn’t work for advertising consumers that their costs of traffic acquisition should increase. I cannot say this sounds like price fixing, but it sure looks suspicious to me (and if it IS price fixing, that’s a violation of the Sherman Act).
Can Consumers Benefit From A Microhoo Solution?
The card that Steve Ballmer is playing is technology: by combining inventories, Microsoft and Yahoo! will be able to better analyze searcher patterns and improve relevance in their search results. Relevance, however, is a very subjective topic. I think they have pretty relevant search results now.
What Ballmer is really looking for is a more efficient mechanism to place converting advertising in the search results. The more clicks Microhoo get from advertising, the more money they make. They don’t care about organic search results or what searchers find — all they care about is increasing their Number of Queries Performed and attracting more advertisers.
Of course, anyone who understands basic PPC technology will be quick to point out that you need to maximize relevance in your organic search results in order to maximize relevance in your contextual PPC advertising — and therefore it is in Microhoo’s best interest to maximize organic relevance.
But how can they do that if the SEO community doesn’t cooperate with them? And how can or should the SEO community cooperate with Microhoo? Here’s the problem: If we work to make Bing search results look like Google search results, consumers really have no reason to switch from Google to Bing/Yahoo!. Hence, it’s not in Microhoo’s best interests to work with Web marketers in the same way that Google has.
What Can We Do?
Consumers need as many choices as possible. We may be Web marketers but we still go online to research our purchases and trips just like everyone else. Do you really want to be faced with only two choices or would you like to have a third option when you’re looking for information or good deals? Do you want to see only the best ten optimized sites on every major search engine?
Marketers need to have a backup plan. If someone outperforms you in Google, while you scramble to recover your Google position, wouldn’t it be nice to know you’re still getting traffic from Yahoo! and Microsoft? In most cases you’re not getting traffic from those search engines because you didn’t bother to go out and get it, not because no one uses them. Don’t blame Microsoft and Yahoo! for your business decisions.
The Web marketing community has also come to rely upon Yahoo! resources like BOSS, Search Monkey, and Site Explorer. Many Web marketers would welcome similar development from Microsoft. We’ll see better tools come out if more people are developing them, not fewer. So now marketers are asking, what will happen to the popular Yahoo! tools?
If BOSS, Search Monkey, and Site Explorer go away, Web marketers lose out. If Microsoft takes them over or if Yahoo! keeps them we at least stay where we are today. But everyone should gain something if Microsoft competes with Yahoo! and Google by offering its own marketing tools. Hence, we want to see Microsoft and Yahoo! retain separate Webmaster consoles.
The problem is, if they use the same search index we won’t have as many options for our marketing as we once did.
How To Express Your Antitrust Concerns To Government
This is a complex situation, and Microsoft and Yahoo! announced a 2-year phase-in to this arrangement which I suspect allows them plenty of time to persuade the U.S. Department of Justice and other government bodies (don’t forget the European Union).
Nonetheless, you have the right as a citizen of your country to share any concerns you may have regarding the deal with appropriate government agencies. You can contact the U.S. Department of Justice Antitrust Division online. Be sure to read their guidelines carefully, as they are looking for well-written explanations of your concerns. They provide basic information on Antitrust laws for consumers as well.
I’m not as familiar with the European Union’s Antitrust governance but their EU Antitrust Site is pretty thorough. I see links for consumers on the right-hand side of the page.
If you support the proposed deal between Microsoft and Yahoo!, be sure you understand the ramifications of what they want to do. This is not bottom-of-the-market consolidation between two minor players. This is top-of-the-market cooperation designed to improve their profits at the expense of future advertising customers. If you’re a search marketer, that means you will pay for their handsome new profits.
I think you should be concerned as both a Web search consumer (because of the lost uniqueness in search results) and as a Web marketer (because of the loss of competitive service pricing pressures that help keep your costs down).
This deal may look like a win-win for Yahoo! and Microsoft (or maybe just Microsoft), but it looks like a lose-lose for you and me. I oppose it.
How do you feel about it?
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