PPC Ads: Analyzing the Bing Yahoo! Alliance

For the past three years, pay-per-click advertisers on Microsoft’s Bing have enjoyed distribution across both Bing and Yahoo! Here is owing to the Bing Yahoo! Search Alliance, which enables advertisers to apply one ad platform for both se’s. While Google continues to be the king of PPC advertising, lately Bing and Yahoo! have made a dent in Google’s market share. comScore’s March 2013 search engine rankings showed Google with 67.1 percent market share, with Microsoft and Yahoo! having 16.9 and 11.8, respectively, both slightly higher than previous months. Some published reports claim advertisers on Bing have seen better results than from Google in certain categories.

Yahoo! and Microsoft each gave something up after they entered into the hunt alliance. Yahoo! gave up control of its ad platform. Microsoft conceded that it might never be a significant player within the search space unless it increased market share, which was within the single digits before the alliance.

So, the 2 struck a deal. Microsoft would own the ad platform and the advertisers, and would promise Yahoo! a certain quantity of revenue per search. The assumption presumably was that by combining resources, market share (and thereby revenue) would increase.

The deal was set to run out this year. But last week, Yahoo! and Microsoft renewed it for one more year.

The History

Let’s look at the events that led as much as last week’s news. Earlier than 2009, advertisers worked individually with Microsoft and Yahoo!. In truth, sooner than 2003, Yahoo!’s paid search results were powered by Overture, which pioneered the PPC ad auction model, sooner than Google AdWords. In 2003, Yahoo! bought Overture and at last morphed the advertising platform into Yahoo! Panama, making it more like AdWords.

Meanwhile, Microsoft entered the quest ad business in 2004 with MSN Search. This program enabled a maximum of 3 advertisers for any given keyword. Advertisers paid a flat, per-click rate — unheard at the moment — and there has been no bid management or keyword research. Advertisers needed to work with a Microsoft rep so as to add keywords to their accounts.

Yahoo! provided ads to Microsoft on keywords for which there have been no advertisers.

Then, in 2006, Microsoft launched its own PPC platform, called adCenter.

For the following three years, advertisers that wanted a presence in all three major serps — Google, Yahoo!, Microsoft — needed to use three very different ad platforms. For time-crunched advertisers, Microsoft was often the primary engine to surrender on, attributable to its dismally low market share.

Then, in 2009, Microsoft and Yahoo! announced the hunt Alliance, even though it didn’t officially launch until 2010. That’s when the revenue guarantee kicked in.

Yahoo! Wants Out

Although Yahoo! and Microsoft agreed last week to the extension, The Wall Street Journal reported that Yahoo! wants out of the deal. Microsoft hasn’t ever net the revenue-per-search goal it promised Yahoo! back in 2010. Search Engine Land reports that Yahoo! CEO Marissa Mayer is gloomy with the deal, claiming that the consequences are below expectations. Mayer, a Google employee until 2012, has indicated she feels that Yahoo! ought to be doing better than it can be, and that changes are at the horizon.

Still, Search Engine Land speculates that Yahoo! won’t ever leave Microsoft, since it lacks the technology to run a PPC program by itself. Indeed, technical challenges were a barrier to using the old Yahoo! Panama system — it was poorly designed and clunky.

Still, Yahoo! continues to make moves toward search independence. On Tuesday, Yahoo! announced the growth of its relationship with Chitika — an ad network — into mobile search ads. While this move currently benefits Bing advertisers, too, some speculate that Yahoo! is using the Chitika relationship to reinforce its own position in search advertising.

On the heels of the Chitika announcement, Yahoo! said on Wednesday that it was launching new tools and upgrades for search advertisers. While details are sketchy immediately, it kind of feels as if Yahoo! is indeed attempting to develop partnerships which will position a future split from Microsoft.

What Does this Mean for Advertisers?

At this point, all of this suggests nothing new to advertisers. If you’re using Bing ads, and you’re getting good results, keep doing so.

If you’re not using Bing ads, you must consider them. There are lots of advantages to advertising on Bing. I’ve addressed them here previously, in “Pay-per-click Advantages on Bing.” Fifty-a million unique searchers at the Yahoo! Bing network don’t use Google in any respect. And Bing shows strong performance in numerous important verticals, including financial services, computer and Internet, and business. Often, Bing ads have fewer competitors and lower price-per-clicks than Google.