Yahoo Is Not Pleased With Its Microsoft Search Deal

    February 22, 2013
    Chris Crum
    Comments are off for this post.

That big Yahoo Microsoft search deal is not working as well as Yahoo would like.

Do you think Yahoo will sever its ties with Microsoft prematurely? Do you think it should? Share your thoughts in the comments.

CEO Marissa Mayer made comments at the Goldman Sachs Technology and Internet Conference in San Francisco on Tuesday expressing disappointment with the deal. Reuters quotes her:

“One of the points of the alliance is that we collectively want to grow share rather than just trading share with each other…”

“We need to see monetization working better because we know that it can and we’ve seen other competitors in the space illustrate how well it can work.”

Rumors have existed for quite some time, that Yahoo and Microsoft could kill their search deal early, but we’ve heard nothing substantial enough to suggest this is going to happen. However, Yahoo seems to be getting increasingly impatient.

Yahoo is a different company than it was when it made the deal with Microsoft. Marissa Mayer is the fifth person to hold the CEO position while the deal has been in place (granted, two of them were interim CEOs). It was announced under Carol Bartz, and has gone through leadership from Tim Morse, Scott Thompson, Ross Levinsohn, and finally Mayer.

Mayer is, of course, a former Googler, and has brought other former Googlers along for the ride. Since Mayer has been at Yahoo, the company seems to be closer with Google than any other time in recent memory. In fact, last week, Yahoo announced a new partnership with Google (non-exclusive) for contextual ads, which will see Yahoo displaying contextual display ads from Google on various Yahoo properties and “certain co-branded sites” using Google’s AdSense for Content and AdMob advertising offerings.

“By adding Google to our list of world-class contextual ads partners, we’ll be able to expand our network, which means we can serve users with ads that are even more meaningful,” said Yahoo in its announcement. “For our users, there won’t be a noticeable difference in how or where ads appear. More options simply mean greater flexibility. We look forward to working with all of our contextual ads partners to ensure we’re delivering the right ad to the right user at the right time.”

We asked Microsoft’s Stefan Weitz about Google and Yahoo’s partnership last week, when we spoke with him about Microsoft’s new “Scroogled” campaign. The only comment he offered on the subject, was “I’d say I wonder how Google is using the content [of] your private communications in Gmail to serve ads in other places.”

Google Executive Chairman Eric Schmidt recently expressed interest in partnering with Yahoo, years after the two companies tried to partner on a similar search deal to what Yahoo has with Microsoft. The partnership never happened thanks to the threat of regulation, so Yahoo settled for Bing, which regulators did not have a problem with.

Since all of that, Google has cleared some significant regulatory hurdles (though it faces others). Last month, the company settled with the Federal Trade Commission, which found that Google’s search practices did not violate antitrust law.

A couple weeks ago, Yahoo released its earnings report for Q4 and the full year 2012. The report was better than many analysts had expected, and this was helped significantly by better-than-expected search performance. Mayer made some comments during the company’s earnings call, indicating that search is a major priority at Yahoo. Wired quoted her:

“Overall in search, it’s a key area of investment for us,” Mayer said. “We need to invest in a lot of interface improvements. All of the innovations in search are going to happen at the user interface level moving forward and we need to invest in those features both on the desktop and on mobile and I think both ultimately will be key plays for us.”

“We have a big investment we want to make and a big push on search. We have lost some share in recent years and we’d like to regain some of that share and we have some ideas as to how.”

It was interesting to see this emphasis put on search, but still on the front end, which would seem to imply that Yahoo is happy to continue outsourcing the back end. It makes you wonder what Mayer’s thinking, particularly if she’s not happy with the Microsoft/Yahoo deal performance.

Last week, reports emerged that Russian search engine Yandex has surpassed Bing in global search queries, though as Danny Sullivan at Search Engine Land notes, Bing is still well head of Yandex in unique searchers.

Recent research from RKG has indicated that the Yahoo Bing Network continues to take away market share from Google, as Bing recently pointed out to us, noting that Bing Ads have gained paid search spend share from Google four quarters in a row.

Obviously it’s not benefiting Yahoo to the extent the company would like.

Microsoft did tell us about some new ad formats that it will be launching this year, such as Google-like product listing ads and click-to-call ads with Skype integration. Both formats have proven popular with Google advertisers, and the Yahoo Bing Network continues to strive to emulate Google’s success.

David Pann, GM of Microsoft’s Search Network tells us that advertisers come over to the Yahoo Bing Network with the mentality of “It performs well over there [Google], so it will here too.”

Will Yahoo and Microsoft’s Search Alliance stay in place? How long will Yahoo remain patient?

This is not the first time we’ve seen Yahoo speak publicly about dissatisfaction with Microsoft in recent memory. Regarding IE 10’s “Do Not Track” default, Yahoo recently slammed Microsoft saying that the company’s move “degrades the experience for the majority of users and makes it hard to deliver our value proposition to them.”

That was not an off the cuff remark. That was an official blog post.

At the conference, Mayer also reportedly made comments expressing an interest in strengthening Yahoo’s relationship with Facebook (a big partner of Bing’s). Bloomberg reports that Mayer said she plans to focus on mobile apps and strengthening ties with Facebook to “bolster turnaround efforts at the biggest U.S. web portal.” Brian Womack and Peter Burrows quote her:

“A lot of the strengths of Facebook are available to Yahoo users,” Mayer said yesterday at an investor conference in San Francisco hosted by Goldman Sachs Group Inc. “That’s something we want to build upon. We have a real commitment to bringing valuable content to our users.”

Enhancing social features is crucial to Yahoo’s success, Mayer said, as she reinforced her preference to partner with companies like Google, Apple Inc. and Facebook rather than build expensive new products.

Facebook CEO Mark Zuckerberg said he would “love” to work with Google at a recent company press event, though he indicated that those two companies aren’t really on speaking terms. He did, however, also say, ““We want to work with any company as long as they’ll honor the privacy of the folks on Facebook.” (as quoted by The Verge).

On Wednesday, Yahoo announced that it has expanded its display advertising partnership with Microsoft and AOL into Canada.

Do you think a Yahoo search partnership with Google would be good for users? For advertisers? Could the deal that the companies backed out of a few years ago work in the future? Is Yahoo better off sticking with Microsoft? We’d love to hear what you think about it.

Image: Google Talks Archive (YouTube)

  • Mike E. Delta

    If they do run with Google, I still wouldn’t use Yahoo…I’ve tried to use they’re sites in the past. They are just plain, outright UGLY to me! I will keep using BING and be quite happy with my daily image and all my email/office services that are attached. Marissa is just a Google user and she prefers to bring them into her old house, and that’s fine. As for me, Yahoo! is dead. =[

  • http://www.wedgeim.ca Wedge Internet Marketing

    YAHOO Blows roll over die, and take aol with you will you?

  • http://www.cartridgesave.co.uk Cartridge Save

    I like Mark Zuckerberg’s comment in the article! I’m sure he would “love” to work with Google! Who exactly wouldn’t? Terrific exposure on a grand scale, although Facebook really should think about their oversaturation of the internet. I think they’ll be reaching a point soon where they can’t actually keep growing. There are, after all, only a certain amount of people on the planet. I guess they’ll try and get into China next.

    As for Yahoo; it’s good to see their profits are up. I should imagine they’ll see out the deal and then call it quits. If the deal’s not working then there’s no point forcing it onwards.

  • Jerrie DeRose

    I personally do not like Google and no longer use Google search or Ad Sense. I get much better results and links using Yahoo and then Bing for web searches. And for the articles I write and publish on-line I now use Chitka if it is a choice. Their payment options and amount you have to earn to get paid is much much better since Google revamped AD Sense. What they pay per click on contextual ads is much better also. Unfortunately, Chitka is often no offered as an option at all.

  • Anon

    You know the worst part about this whole article? “at the Goldman Sachs Technology and Internet Conference in San Francisco”.

    It’s not enough that the global banking cartel owns and controls the entire global economy and is systematically robbing the people of everything they own, we now accept them meddling and delving into other areas of business – no doubt to see what they can suck out of that too!

    I stopped reading after I read the words Goldman Sachs. Wherever these criminals go it’s bound to cause trouble and no one should be supporting them or giving these pond scum the air of publicity in any way.

  • rachel hedison

    Yahoo and Microsoft are two different companies with two distinct line of work. Yahoo is a search engine company, while Microsoft builds softwares. If you put the two companies together, it’s not going to work because of the differences. It’s like positive and positive or negative and negative. Like a magnet, if you connect the negative end of one magnet to the negative end of another magnet you get repulsion. But, if you put a negative and positive end of each magnet you get attraction. It works. Simple as that.

    Why would you put gas on a car that you’ve already wrecked?

    So keep it simple. Yahoo and MS do what you do. Don’t do another one’s job. Just like Jimmy Johnson said the former Dallas Cowboys coach, “do your job; don’t do someone else’s job”.

  • Lebb

    I don’t “do” Bing, and I have always preferred Yahoo over Google. So
    kiss my bum, Google snobs. Everyone has their unique preferences.

  • http://richinwriters.com Steven

    Yahoo would be better off doing things on its own Bing is not understanding how the search market works. Until I discovered Google Yahoo was my search engine of choice. Yahoo doesn’t need Bing!

  • http://Mabuzi.com Mabuzi

    I oppose cartels and collusion.

    Competition is good

  • Rob Crombie

    Google are becoming ‘evil’
    Their searches ignore your search demands.
    And recently they have introduced image censorship by removing the option to turn off Safe Search. And what is worse they lie to your face when you ask them if they have done that.

    • weaselspleen

      No Google has not removed the option to disable safe search. I know because I just checked for myself 10 seconds ago. The option’s still there, you can turn it on, or off.
      Nobody’s lying.

  • http://www.realitist.com Robert

    Both bing and google search is problematical finding what they want to search for instead of what’s asked for. At any time your sites can vanish and can only to be found by searching for its title within quotation marks. This can be due to improving the site or not touching it or anything at all because you’ll never know. Their support does not give real answers to solve whatever their problem with your site is. Their webmaster tools often serve to torture webmasters, with endless requests to resubmit sitemaps, etc. seems to make getting into the index take even longer than by anonymous submit. WE NEED A 3RD PARTY QUALITY SEARCH THAT FINDS WHAT IS ASKED FOR!!!

  • Dr Frank Cus Rial

    Well I do not know whether the problems I have seen during the last week with Yahoo Seaarch have anything to do with Microsoft BUT having had a wonderful experience with Yahoo in the past, this experience of getting erroneous sites popping up everytime is a real bother.

  • Robert

    after such deal adsense will not convert anymore soon.

  • http://brofaropsseo.tk Dr. Robert

    As we all knew Google has been blitzing websites with algos and refresh / updates. We all should have seen this coming at Yahoo with the changing of the CEO, a former who at Google. The relationship of the Big 3 is evolving to the Big 1, “GoYaBing SE 2013”. With it comes more headaches for webmasters, service providers, and patrons.

  • http://www.graciousstore.com Nina

    This is interesting! Yahoo in partnership with Google? Very soon Google will buy Yahoo completely and make itself as gigantic as it can. I thought Yahoo was in partnership with Microsoft to cob some of Google’s overreaching authorities over search.

  • http://performetrics.com.au performetrics

    Once Marissa went to Yahoo this was inevitable, her move was Google’s way of getting in to Yahoo via the back door…

  • http://jaktosiestalo.blog.com/ vps

    Hi! I really like this blog. Tell me please – from where do you have information for ths blog?