Google and Yahoo! Search Agreement

June 15, 2008 · Filed Under Advertising, Google

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For any of you who have been living in a hut in the depths of Mongolia for the last week, you may have mised the big news that Google and Yahoo! came to an agreement a few days ago:

Today, we announced a non-exclusive advertising agreement that will provide Yahoo! with access to our AdSense for search and AdSense for content advertising programs on their U.S. and Canadian web properties.

The above statement comes from a blog post posted by Omid Kordestani, Google’s Senior VP, Global Sales and Business Development. He goes on to say:

This is not a merger. Rather, we are merely providing access to our advertising technology to Yahoo! through our AdSense program.
This does not remove a competitor from the playing field. Yahoo! will remain in the business of search and content advertising, which gives the company a continued incentive to keep improving and innovating. Even during this agreement, Yahoo! can use our technology as much or as little as it chooses.
This does not prevent Yahoo! from making similar arrangements with others. This arrangement is not exclusive, meaning that Yahoo! could enter into similar arrangements with other companies.
This does not increase Google’s share of search traffic. Yahoo! will continue to run its own search engine and advertising programs, and the agreement will not increase Google’s share of search traffic.
This does not let Google raise prices for advertisers. Google does not set the prices manually for ads; rather, advertisers themselves determine prices through an ongoing competitive auction. We have found over years of research that an auction is by far the most efficient way to price search advertising and have no intention of changing that.

Regardless of what Google are officially saying, it is obvious that the Microsoft deal, was something that Yahoo! just didn’t want to pursue, even if it could have been better for them. Also, Google are trying to get across that this won’t strengthen their search share… Say what?! Of course it does. It can’t get much better in the UK, but remember this deal applies for the US and Canada.

So, marketeers in the UK, what should you do now? I wouldn’t do anything at this point. You need to be aware that this has happened and track the success of it. It will be interesting to see if the balance of power swings even more in the mighty G’s favour. If your business is in the US, I see a big question raising it’s head…