Well, it has finally happened. After coming to a basic agreement in July and finalizing the terms in December of last year, Yahoo! and Microsoft have received regualtory approval from the U.S. Government and the EU. The result is a search partnership between Microsoft and Yahoo! in their combined battle for online advertising with Google. The new search platform has been named Search Alliance.

Ads in search on the two partners will be powered by Bing, and their combined audience is estimated at 150 million Americans and over half a billion people worldwide. All of the ads will be served from Microsoft AdCenter.  The two companies are currently working out the technology details, so all of your ads on either network will stay the same for the time being. The hope is to have everything running off of the Microsoft AdCenter by Q4 2010 to capture the valuable holiday season.

What this means for advertisers

If you manage or use either Yahoo! or Bing search advertising, then nothing will change for a few months. The new merger should reach out to all advertisers with ample notice and instruction on moving over accounts, or possibly have everything moved over automatically. We will see how this works out in the Fall or possibly later. There is no hard deadline set for the transition, but it is coming.

The combination of the advertisers may end up affecting your campaigns in more ways than just an interface change. With the combination of searchers, there will also be a combination of advertisers. Currently if you run campaigns in both search engines you are competing in separate auctions for your PPC ads. This split can keep the Cost-Per-Click (CPC) lower because the number of advertisers (bidders) is lower. With this new merger, the combined pool of advertisers may cause the CPC to go up for some of your keywords.

Currently we see the cost of keywords in Bing and Yahoo! to be between 40%-60% of the cost of the same words in AdWords for similar position. These cost savings are a primary motivator to advertise on the Yahoo! and Microsoft platforms. While this new paring will grow the number of searchers it could also increase the bottom line. We won’t know for sure until the move is completed, but it may be a good idea to start planning for an increase in the cost of keywords.

The major benefit to advertisers is the consolidation of advertising. Search Alliance will become a one-stop-shop for PPC advertising. The alliance will instantly become the #2 search advertising platform, so advertisers that run ads on Search Alliance and on Google AdWords can easily capture a large percent of the overall search market.

The bids for keywords will probably go up, but they are still not likely to be more expensive than AdWords. Google currently maintains about 80% of the search market, but that extra 20% can be the difference for some online advertisers. The new Search Alliance between Yahoo! and Microsoft will make capturing that audience easier than it has been before.

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