WebProNews

New Yahoo search ad system a failure?

Google CEO Eric Schmidt thinks an ad deal with rival and potential Microsoft ally, Yahoo, could work without incurring the wrath of antitrust investigators. Yahoo shareholders should be the wrathful ones.

Soft and fluffy Google as evil, dare we suggest Microsoft-like, competitor? Bill Gates once said Google was the company most like Microsoft that he had ever seen.

Yet Schmidt's comment in the New York Times, talking about how Google and Yahoo can work out a way to get Google's lucrative contextual ads into Yahoo search, suggest they can do this without sending the Justice Department's antitrust division into a tizzy.

"We would anticipate structuring a deal to address antitrust concerns," he said earlier in May.

No kidding. The approach suggested would be that of humble supplier to another business. It just happens that the supplies could be worth a billion dollars to Yahoo in a year.

Yahoo, really, contains the much greater issue that has eluded broader conversation. A brief ad test with Google's AdSense making a limited appearance in Yahoo's search proved so effective that both sides want to expand it.

But Yahoo only finished rolling out its big upgrade to contextual search advertising in the past few months. Dubbed Panama, the system spent years in development and testing.

Panama should have brought Yahoo's search advertising closer to Google's performance. Yet Yahoo stands ready to ditch as much of it as they can, mostly to avoid being dropped whole into Microsoft's slavering fang-filled maw.

If Yahoo's shareholders, both the long-term holders and the new arrivals like Carl Icahn and T. Boone Pickens, want to really make Yahoo CEO Jerry Yang squirm, they should ask why all that development failed to the point where Yahoo needs Google as savior now. That would be an uncomfortable conversation, we're sure.