Google and Yahoo Ad Deal Set To Launch in OctoberSEM Advertisers Brace For Historic Rate Increases
PPC Rates Set to Explode ... Click Fraud Goes Unchecked.
Google CEO Eric Schmidt confirmed yesterday that despite pressure from the US Justice Department, the Google Yahoo advertising partnership will proceed with its scheduled launch of early October. “We are going to move forward,” Schmidt said. “We are in the process of talking to the government. They’ve not indicated one way or the other how they’re dealing with us. We always worry a little bit, but we think our arguments are pretty strong. Yahoo has made it very, very clear they’re going to take the best parts of their search network and combine them with ours.”
The advertising partnership between search competitors is designed to serve Google AdWords sponsored search ads in combination with Yahoo Search Marketing ads in the Yahoo Search results pages along with other forms of sponsored search contextual advertising throughout the Yahoo network. The new combined search advertising deal is expected to bring Yahoo a much needed $800 million in additional advertising revenue.
Under the join PPC advertising agreement, Google AdWords ads will be displayed in Yahoo Search results at higher cost per click values than Yahoo Search Marketing ads, as Google and Yahoo and will raise click fees once again and then split revenues. The deal means higher click fees for PPC advertisers in both Google and Yahoo. This brotherly love from Google could be pay back as Yahoo provided Google search technology free exposure and helped jumpstart AdWords eight years ago.
SEM advertisers can higher fees and more bogus click activity as no new click fraud protections will roll out in the new partnership.
As click fraud increases Google, Yahoo, and MSN continue to look the other way.
Google and Yahoo are both excited as they can drive rates higher and jointly profit more with little effort. Yahoo and Google revealed some exciting money earning details about their search advertising agreement in an SEC filing recently. No financial terms were disclosed and the filing is heavily redacted in an area that covers "other business opportunities."
Google and Yahoo released excerpts of their new search advertising partnership that keeps financial details secret. In a filing with the SEC the companies take the unusual step of disclosing the contract governing the partnership, but left out any financial terms, such as the revenue split on their new PPC deal.
Internet companies typically guard the terms of such contracts to protect their ability to negotiate pricing at variable terms with other customers.
Critics say the deal threatens competition for search advertising that runs alongside web searches. Congressional leaders have conducted hearings to investigate what impact the joint partnership could have on the Internet advertising market. The agreement covers the United States and Canada, but not other international markets.
Rivals such as Microsoft have protested that Google already controls more than 70 percent of the Web search ad market and that a Yahoo deal would give Google control over more than 90 percent of the market. Google and Yahoo executives have defended the pact, saying they will compete aggressively in other areas. No party has commented on Click Fraud.
Seeking to shore up its advertising business while warding off pressure to merge from Microsoft, Yahoo struck the agreement with Google, the dominant search engine in the United States and around the world.
Under the new deal, due to take effect in October of 2008 following regulatory approval, Google will supply Yahoo with Sponsored Search listings to run alongside Yahoo's Web search system. Yahoo after many stumbles and poor management decisions has fallen from the undisputed leader in keyword search with 70% of market share in 2000 to less than 20% today.
Google and Yahoo have sought to portray the partnership as a non-exclusive arrangement in which Yahoo is effectively contracting with Google to sell ads alongside a portion of its search results. This in turn can allow Yahoo to focus on other aspects of its business where it is more strongly positioned.
The contract reveals details of previously disclosed plans to make Yahoo Messenger and Google Talk, the companies' instant messaging (IM) systems, work together, it redacts four of the five other points in this "other business" section.
Yahoo has said it expects to generate an additional $250 million to $450 million in additional cash flow in the first 12 months after the agreement goes into effect.
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