Advertising CEOs Urge Quick Approval of Yahoo-Microsoft Search Pact

Tell Justice Department That Deal Would Lower Ad Costs, Keep Google in Check

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NEW YORK ( -- If there were any lingering doubts about Madison Avenue's support of the proposed Microsoft-Yahoo search deal, those were dispelled today with an open letter signed by four holding company CEOs.

In the letter, Publicis Groupe CEO Maurice Levy, WPP Chief Executive Martin Sorrell, Interpublic Group of Cos. CEO Michael Roth and Omnicom Group CEO John Wren urged the Department of Justice, now reviewing the deal, to approve it quickly.

"We believe that Yahoo and Microsoft's proposal to combine their technologies and search platforms is good for advertisers, marketing services agencies, website publishers and consumers," said the letter, which was also signed by Nancy Hill, CEO of the 4A's, a Madison Avenue trade group.

Advertising agencies had been strongly supportive of the deal since it was initially proposed last summer, in contrast to the earlier proposed partnership between Yahoo and Google on search, which they strongly opposed.

The prevailing view among agencies is that a combined Yahoo and Microsoft would bring greater competition to search, better pricing and more inventory, as well as act as a check on Google, the market leader. Currently, Google has roughly 70% of the U.S. search ad business, Yahoo has nearly 20% and Microsoft has 10%. Microsoft recently gained a few points of share by spending $100 million to promote its newly branded search product,

"We don't think 10% share for Microsoft is enough to grow from even with all its money," said Rob Norman, CEO of Group M Interaction, a unit of WPP. "It would be great if they could get on with it and build a marketplace."

The Justice Department is still studying the deal. It has already ruled that search itself is a discrete market and distinct from the broader online advertising market. Now it has to decide whether to allow the No. 2 and No. 3 in the market to consolidate to take on the No. 1 player, Google.

The Justice Department is still soliciting comments from marketers, agencies and consumer groups on the proposed deal. A parallel investigation is being held by the office of Sen. Herb Kohl, D-Wisc., who could decide to hold public hearings on the deal.

If history is any indication, the Justice Department takes the collective opinion of other businesses in the space seriously. "If the guys who have a lot at stake say they won't be hurt and even desire it, then that is a heavy token on the table," said Albert Foer, president of the American Antitrust Institute, in a recent interview with Ad Age.

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