What a Google-Yahoo advertising deal means

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Assaf Igell is co-founder and VP-marketing of Syntryx Executive Solutions, a media planning and auditing company based in Boulder, Colo. BtoB recently asked Igell his views on the possibility of the proposed Google-Yahoo joint advertising deal and what it could ultimately mean for b-to-b marketers.

BtoB: As you know, a decision by antitrust regulators may come soon on whether to approve a deal between Google and Yahoo, whereby Yahoo’s search result pages would include ads from Google’s advertisers. What’s your take on this and its potential impact on marketers?

Igell: People are rightly concerned when it comes to large-scale deal-making between giants such as Google, Yahoo, MSN or AOL. Because of how big these players are and their share of the global Internet advertising spend, it’s certainly possible to understand why and how those deals might affect competition and raise privacy concerns. My way of under-standing this is to look at their own data, their Web sites and technology portfolios.

BtoB: Explain what you mean?

Igell: I am suggesting classifying their portfolios into two main types of assets: media, on the one hand, and advertising technologies, on the other. From a media perspective, Google has its search engine as its main publishing asset, while also investing heavily in content and basic services assets like Google Health, Google Earth, Maps, Wikipedia-compatible Knol, the video site YouTube, Gmail, the social network Orkut and more. All these are investments in media assets where Internet users spend their time and where most of Google’s technological components help maximize advertising revenue.

BtoB: And Yahoo?

Igell: Yahoo’s portfolio is different. Looking at Yahoo from a tech angle, we see several divisions: search engine and bidding technology by Yahoo Search (previously, the high-end ad network BlueLithium and Right Media, still the most innovative ad serving technology in the market today.

Recently, Yahoo made a significant advancement toward a true solution for behavioral targeting, made possible because of a huge amount of aggregated usage data that could be applied to complement Right Media’s core intelligent ad-serving and dynamic ad-pricing mechanisms.

Yahoo always invested in more traditional publication of content, specifically via its popu-lar home page. So if Yahoo—undoubtedly one of the biggest publishers—lets Google monetize its pages, Google’s control over the supply of advertisement dramatically increases and, ac-cordingly, leverages its control of pricing.

BtoB: And the potential ramifications?

Igell: It seems that Yahoo is out to get two main things from a deal with Google: a proven alternative to its failing search-monetization effort and access to more data that enable better behavioral targeting, complementing its technological and differentiating assets.

It’s this second component that has people concerned about both privacy and competition. It will take a search engine to really be able to apply all of Yahoo’s innovative technology. A Yahoo-Google joint venture would produce the only entity on the Internet with access to a critical mass to enable true behavioral targeting. That’s a lot of private information in one place and a significant limitation for others to compete in behavioral targeting and personalization of the Web.

BtoB: What do you think the impact on advertising prices might be?

Igell: Regardless of what happens with the Yahoo-Google deal, ad rates will go up due to demand, as more and more budgets shift resources from offline to the Internet. And the first channel that will be used will be search, so rates will increase naturally. But a Yahoo-Google deal will expedite the process and may require new regulations to make sure competi-tion is possible.

BtoB: What should marketers do to protect themselves?

Igell: To be competitive, marketers … should diversify their online marketing investments and look for advertising channels that go beyond search. There are display ad opportunities in ad networks, e-mail marketing, affiliate market opportunities and of course social marketing opportunities such as video and blogs. Marketers need to invest in more cross-channel marketing and diversity their ad spend.

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