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Yahoo Defends Google Deal

Posted by: Rob Hof on September 11, 2008

As part of a three-hour media day today, a Yahoo executive offered an interesting defense of the company’s pending search deal with Google. That deal, which was supposed to start in a few weeks, has come under increasing fire by people concerned that it will cement Google’s already huge lead in search advertising. Now, Justice is apparently looking whether there’s a case to quash the deal.

Hilary Schneider, executive vice president of Yahoo U.S., positioned the deal with Google as an extension of Yahoo’s partnerships by which other publishers such as hundreds of U.S. newspapers can sell ads on Yahoo properties. Her example: Search for “red roses in Birmingham Alabama” and you get no ads on Yahoo search results page. Google’s search results page has 11 advertisers. So by hooking up with Google, Yahoo is giving those advertisers a chance to reach Yahoo users as well as Google users and potentially get more customers. In Yahoo’s view, says Schneider, “We are able to essentially create more access and better ROI for the advertisers.”

Many advertisers don’t think that tradeoff is worthwhile because they believe they’ll pay more for the same results. Yahoo’s essentially saying that advertisers will be getting better results for their money, whatever they pay. I don’t envy the Justice Dept. trying to sort all this out.

Update: During questions after her presentation, Schneider said Yahoo is confident the company can get Justice “comfortable” with the deal by the planned early-October start of the deal. She said Yahoo is “actively involved in the conversation” with Justice on the deal.

Schneider shrugged off concerns by some advertisers that ad prices would rise after the deal. “Advertisers are rational and bid what they see value for,” she said. Also, she notes, Google advertisers today can’t reach Yahoo users with their ads, so the deal would help them do that and in the process serve Yahoo users with ads they didn’t get before.

Given all the furor of the last few days, I’m surprised Yahoo sounds so confident. It may not be long before we find out if that confidence is well-placed.

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Reader Comments

Randy Penn

September 16, 2008 02:02 PM

This was an obvious setup. If you do the same lookup at yahoo for Chicago roses you get a dozen advertisers. Even Gary, Indiana has an ad. They purposely manipulated their pages which they do often. Advertisers can place advertising on yahoo through its own advertising network. As a user why would I want to see google ads on Yahoo, we want to leave them behind with their endless adsense website returns. Can't anyone just make a real search engine?

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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