Why ANA Opposed Google/Yahoo Deal

Microsoft Made 'Noise' but Pact Partners' Silence Rankled Group More

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NEW YORK (AdAge.com) -- It's not as sexy as the presidential race, but the campaign to decide whether the Yahoo-Google search-ad partnership is good or bad for online advertisers is just as heated.

On one side: Google and Yahoo. On the other: Microsoft and, most recently, the Association of National Advertisers. In the middle? The Department of Justice, which is considering whether a search partnership to let Google sell ads alongside some Yahoo search results would violate antitrust regulation.

Last week the ANA opposed the deal in a letter to the Justice Department, saying it likely would result in a less-competitive landscape and higher prices for advertisers, ad agencies or rival businesses, and may well deal big blow to Google and Yahoo.

But just how that letter came about -- and what happens now -- has been the subject of much speculation.

Some argue that Google and Yahoo were too vague about the details of the partnership and too slow to address the issue with advertisers, while others say Microsoft aggressively tapped its network of lobbyists and consultants to get the opinion issued. In the end, it might be a little of both. ANA CEO Bob Liodice laughs off the suggestion that Microsoft would be influential enough to tilt the organization into this kind of action.

Loud opposition
"Microsoft was noisy," he said. "We had conversations with Microsoft, but we also [had them] with my board of directors. ... If [Microsoft] was the only outcrier out there, we probably wouldn't have done much." He said members throughout the ANA -- particularly the board, which includes representatives from General Motors Co. and Procter & Gamble -- were concerned.

Of course, in this campaign Microsoft has been a heavy behind-the-scenes lobbyist and a frontline critic, and one of the only marketers to publicly denounce the deal. Then again, in addition to spending hundreds of millions on advertising (many times the outlay of Yahoo or Google), Microsoft is also a major online competitor.

It sent its own counsel to testify against the deal and has spoken to reporters about the company's opinion of it. Microsoft also hired media and ad veteran Michael Kassan as a strategic consultant; he has been engaged by Microsoft for some time on issues of this sort and communicated Microsoft's point of view to the ANA and advertisers.

He said Microsoft's view is also his view. "My feeling is concentration at the level that exists here, historically, has never been a good thing for the consumer," he said. "In this case the consumer is the advertiser and, ultimately ... it trickles down."

Mr. Liodice said he got no indication from his members that they had been consulted by Google and Yahoo before the deal was struck, although both companies say they have since been talking with advertisers, policymakers and other interested parties to explain the partnership. The two companies said they would postpone implementing the deal until Sept. 25 for a voluntary regulatory review, and either party could, until Oct. 11, terminate the pact in order to avoid or end a lawsuit (such as the kind the Justice Department could choose to bring).

Warring parties
The deal has found support within Publicis. In an Ad Age opinion piece, Curt Hecht, president of Publicis' VivaKi division, said the partnership would create more relevant ads, a good thing for marketers.

Google has also found support among some small-business owners, particularly Tim Carter, CEO of AskABuilder.com. His worry? That if the deal is nixed, Microsoft will snap up Yahoo, consolidating the No. 2 and 3 search players. Indeed, the Google deal was born as a solution to help Yahoo stay independent; it will add up to $800 million in cash flow in its first year.

WPP has taken the opposite tack, aligning itself against Google (and Yahoo in this deal) and, perhaps by default -- or perhaps not -- with Microsoft. CEO Martin Sorrell has called Google a "frenemy."

Mr. Liodice said there's nothing to predict the outcome -- and that is a big part of the problem. This summer, the ANA sent a letter full of questions about the deal to Google and Yahoo and met with senior executives at both.

One of the requests: Identify major advertisers who are in support of the deal. Mr. Liodice said he didn't get any. He also said he asked Google and Yahoo for more details on their claim that the deal will theoretically yield better return for marketers. "We said, 'Can you show us some data from the test you collaborated on?' They either didn't know or didn't share."

Google, however, said via a spokesman that "We answered each of the ANA's questions, including providing them with the names of independent advertisers, agencies and individuals who believe that the agreement is beneficial for advertisers."
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