Home Google-Yahoo Ad Deal – The Facts (According to Google)

Google-Yahoo Ad Deal – The Facts (According to Google)

Google has just released a mini-site explaining “the facts” about the contentious advertising deal it announced with Yahoo in June. The deal will go live in early October, according to a report on SearchEngineLand, so the mini-site is an attempt to outline how it will work – and why consumers, publishers, competitors (and the US government) have nothing to fear from it.

In a presentation up on the mini-site, which we’ve embedded below, Google states that one of the benefits of this arrangement is that “Yahoo! remains a vibrant and innovative presence on the Internet”. Which is putting Yahoo!’s position rather bluntly. The crux of the deal though is that Yahoo! will be able to better monetize the ‘long tail’ of their search, using Google’s near invincible Adsense.

Here are the main points, according to Google:

* This is a non-exclusive deal that will strengthen Yahoo!.

* Ad prices will continue to be set by competitive auction.

* The deal is win-win for consumers, advertisers and publishers: more and better ads.

That the deal will strengthen Yahoo! is, unfortunately for Yahoo!, not the contentious point of this arrangement. Indeed we at ReadWriteWeb have first hand experience of why Yahoo! needs this deal. We recently switched back from Yahoo Publisher Network (their attempt at an Adsense alternative) back to Adsense, precisely because the YPN long tail results were so poor. It’s no coincidence that our CPC ads, which display as a backup to our CPM ads, have gotten much more relevant and contextual since we switched back. Unfortunately that told us a lot about the state of YPN.

Let’s be frank, Google has got Yahoo by the short and curlies with this deal – and the presentation below isn’t afraid to give it another twist.

The contentious part of the deal is whether it gives Google a dominant position in the online advertising industry, and therefore will it be bad for consumers and competitors (specifically Microsoft). The closest the mini-site comes to addressing this is slide 10, which has a list of things that the deal is apparently not:

What the deal is NOT

* Not a merger

* Does not remove a competitor from the playing field

* Does not prevent Yahoo! from making similar deals with others

* Does not increase Google’s share of search traffic

* Does not let Google set prices for advertisers

* Does not give Google any equity stake in Yahoo!

It remains to be seen whether American antitrust authorities are convinced by these arguments, or not.

Another point of contention is that Google, once again, makes no mention of the percentage of ad revenue they take. In other words: if there is not enough competition in the market for Adsense, then publishers could end up getting a lower share of the revenue from Adsense as a result. Which is a valid concern for publishers and not one that the slideshow addresses adequately.

One interesting side-benefit of the deal is that it will also enable interoperability between Yahoo IM and Google Talk. This benefits Google more than Yahoo, given that Yahoo is one of the market leaders in IM and Google is not.

Here is the full presentation. Let us know in the comments what you think:

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