What a Microsoft Acquisition of Yahoo Means to Webmasters & Web Publishing Business Models

As a person who has studied search for many years I thought I would analyze how I thought a Microsoft acquisition of Yahoo could change online publishing and internet marketing strategy and business models. This post assumes that the purchase goes through with Yahoo's board and regulators, and that the underlying search architecture and ad platform of Microsoft is used rather than Yahoo's current mess.

Organic Search

• Yahoo! Search is stale. They place way too much on user generated content and worthless tag pages located on sites with a high authority score. Microsoft Search makes it much easier to rank pages on lower authority sites so long as they have fresh inbound links.
• Like Google, but unlike Yahoo, Microsoft places significant weighting on domain names in their relevancy algorithms.
• Microsoft closed their small business directory. Many of Yahoo's regional directories no longer accept paid submissions. It is uncertain what parts of Yahoo might get killed off in staff cuts before and after the acquisition. Submit to the Yahoo Directory while you can.
• Yahoo Shopping and Microsoft Shopping are two of the bigger shopping sites clogging up Google's search results for many queries. A potential merger of these could help the top one rank better while freeing up space for other competitors.
• Yahoo places 4 ads above the fold for commercial searches, driving down organic search results. If Microsoft buys them and runs fewer ads to win marketshare that allows more of the organic search results to receive a solid stream of traffic.
• Yahoo offers a paid inclusion program to sell rankings in their organic search results. If Microsoft buys Yahoo I believe that program will be phased out as it is hard to image that it makes as much profit as it costs in public relations damage, especially if Microsoft intends to catch Google in search.
• Yahoo! News is the leading news site on the web. If Microsoft combines that asset with default installed desktop widgets on Vista they can further enhance that market position.
• Microsoft is bad at following 301 redirects, but they have had that problem for a while, and one would hope they would get that fixed prior to powering Yahoo! Search.

SEO Recommendations

1. Spend some time tracking rankings in Microsoft to better learn their relevancy algorithms if you have not yet studied them.
2. Ensure your website has a fresh content strategy or reason to keep picking up new links.
3. If possible, when starting new projects, try to build them on domain names that match your primary keywords.
4. Submit to the Yahoo Directory while you can. If the Yahoo Directory dies off it may create a hole in the market leaving a profitable business model for another directory or even a site like Mahalo to take its place as a leading generalist editorial catalog of websites.
5. If domain authority (i.e.: running few large sites) was a big piece of your search strategy creating numerous smaller niche sites once again became a profitable strategy.
6. If you were reliant on paid inclusion for traffic that traffic stream may dry up, so your best off learning about Microsoft's ranking algorithms ASAP.
7. Check to see if your site meets the requirements to be included in Yahoo News.

PPC Ads / Paid Search Advertising

• Yahoo! Search's ad platform is still exceptionally clunky. In spite of being recently upgraded they still do not have a public facing keyword tool and only let most advertisers use their keyword tool while they are in the middle of creating a search campaign. Microsoft, is much more open and innovative with their ad platform and advertiser tool set.
• Google has been hoarding data for years without giving much of it back to prospective advertisers. When Yahoo upgraded to Panama they followed Google's path. Microsoft recently launched an Excel ad plugin that shares a ton of useful data with advertisers. If Microsoft buys Yahoo! their data will become more accurate and likely force Google to show more aggregate advertiser data.
• Ad campaign management gets easier because advertisers only need to maintain two ad accounts, which might make self-management of search campaigns more practical for small businesses.

Pay Per Click Ad Recommendations

1. Open an adCenter account using this coupon code for $50 in free ads, and set up your adCenter account to get used to their interface and ad platform.
2. Use the Ad Intelligence plug-in to see how sweet it is.

Display & Contextual Ads

• Microsoft purchased aQuantive earlier this year to own large scale display ad serving capabilities.
• Yahoo has more pageviews than any other website. If behavioral data has hidden latent value they should be able to leverage it across their network and partner websites.
• This merger will likely take YPN out of perpetual beta, creating a credible alternative to AdSense, which will increase the share paid to smaller publishing partners.

Display & Contextual Ad Sales Recommendations

1. Display ads likely to fall in value due to recession, and a glut of inventory from social media and other websites, so I still like higher value businesses that remove greater friction from commercial transactions when possible. The one exception to this belief is in game ads, which I see as having a lot of upside if you can publish games good enough to attract a large audience.
2. The combining of the Yahoo and Microsoft ad networks should create many arbitrage opportunities.
3. If you have a site that profits from AdSense it is in your best interest to try Microsoft's network after it launches. Odds are that Microsoft will be willing to give publishers a large share to win marketshare, and giving Microsoft a try will help them create a more robust network which forces Google to increase AdSense payouts.

International Search

Short term I believe this acquisition is about gaining momentum in the US market. But Yahoo is strong in Japan. They also have significant market coverage in Spain, South Korea, and China. Microsoft has notable search share in some European countries. Both have about 4% marketshare in the UK. You can learn more about international search by downloading this 2007 Global Search Report [PDF].

I think a solid strategy going forward for Microsoft to gain search share in foreign markets is for them to offer their operating system free or at a reduced price for bundling search in the desktop. They already give away operating systems in exchange for feedback or exposure.

If the Microsoft purchase of Yahoo clears, expect Google to start distributing a Google flavored version of Ubuntu to the general public before the year is out. Inside of 5 years Microsoft's operating system will be free or irrelevant.

If you want to read the documents that started Microsoft's major push toward web search they are here and here.

Danny Sullivan offers some great coverage of the deal here