The long-awaited deal between Microsoft and Yahoo! is starting to materialize. And we’re thrilled with this partnership! Not only will it increase competition for Google, thus leveling the playing field and inspiring innovation, it will also eliminate several of the weaknesses seen with Yahoo!’s search program, Panama. While the switch won’t take place for a few more months, we believe it is important for you to understand how this will affect your campaigns.

First, a little background on the deal:  After more than a year of back and forth bartering, Microsoft and Yahoo! settled on a revenue share model in late 2009. The deal stated that for the next ten years, Yahoo! will be powered by Microsoft’s Bing technology and will receive 88% of revenue that Microsoft earns from Yahoo!’s site. Microsoft may also integrate parts of Yahoo!’s Panama technology into MSN adCenter if it so chooses.

Here’s what it will mean for each type of search marketing program:

Paid Search

Because Yahoo! will be powered by Bing’s technology, it will utilize adCenter instead of Panama. This is a major advantage for you. It eliminates Yahoo!’s matching issues and provides more control on the backend, thus increasing volume, relevance, quality and conversions.  Additionally, adCenter provides more transparency with regards to how their system works and how best to take advantage of it. In this new and improved interface, you will be able to target search partners individually, view campaign statistics on a homepage dashboard and see keyword match types in reports, among other things.  Ultimately, you are provided with more opportunities outside of Google for high-quality traffic and conversions.  If everything goes as planned, all paid search accounts will be moved over from Yahoo! to Bing in October 2010, allowing you to have a new streamlined campaign setup for the holiday season.

SEO

In early 2010, Yahoo! removed paid inclusion (PI), which allowed advertisers to purchase top organic rankings.  PI listings once took up the entire first page for some keywords. Now that PI has been eliminated, more opportunities for you to rank on competitive phrases are available. Additionally, Yahoo!’s index has become more active, adjusting positions with increased frequency. This allowed us to be more effective in our SEO efforts and rank your site higher. With only 10% of the market, Microsoft has never been a huge priority in our SEO programs. Moving forward we will be more conscious of Bing results, reviewing positions and optimizing for top ranking.

Content Network

Nothing has been confirmed about the content network. However, this is what we foresee happening: The Search Alliance will align two of the largest trafficked content networks on the web. On their own, neither company has been able to really make an impact in the marketplace with a self-served system. Now, the inventory will be much greater and can be a major source of quality traffic for you.

Outwardly, the only thing that will change is a “powered by Bing” statement on Yahoo!; the major changes will occur on the backend when Yahoo!’s technology is replaced by Microsoft’s. Remember though, this only affects search marketing campaigns—banner display campaigns remain separate.

Still, this is an exciting partnership for search marketers and search advertisers alike. We believe this will have major, and very positive, implications for your search campaigns. Ultimately, it will force both search engines to further improve their technologies—Google because The Search Alliance will be nipping at its heals; The Search Alliance because it will now have the search volume necessary to test and enhance software effectiveness. In the end, this means advanced tools and capabilities that will help improve targeting and make your campaigns more successful.

If you have questions about this deal and what it means for you, please contact your account manager.