Search Engine Optimization

AOL Yahoo Deal

TechCrunch reports that Yahoo and AOL are in merger talks. According to the article, merger could happen this month. If it does, merger will not include AOL’s dial up business.

Time Warner, parent company of AOL wants to dump America Online due to its declining revenues which fell 16%, to $1.1 billion in the most recent quarter (according to this article). If the deal goes through:

Time Warner’s AOL headache is gone, and they have a stake in the world’s most valuable chess piece in the Google/Microsoft search and advertising war.

TechCrunch says that deal structure is currently in discussion between Yahoo and AOL boards. If merger goes through Time Warner will invest 1/3 stake in the new YahOL business.

Yahoo’s founder Jerry Yung made it very clear - he does not want a deal with Microsoft, but as company’s stock hits lows, merger seem to be the only move that can help keep struggling company together. Carl Icahn, corporate takeover shark who joined Yahoo’s board on August 8th, has been very outspoken that Yahoo needs a deal.

This can be the merger everyone is waiting for and odds have gone up since the initial Microsoft bid for Yahoo.

Anti-Trust Email Concerns, Yahoo – AOL deal

Yahoo mail and AOL mail are 2 of the biggest products companies offer. According to Comscore, combined they will have 48% of all email market share. They will also hold #2 in instant messaging with 39% worldwide share (AOL messenger and Yahoo Messenger).

Microsoft + AOL and Yahoo

There’s much speculation that Microsoft will swallow an even more attractive entity Yahoo+AOL and there are a lot of good strategic reasons supporting those rumors.

According to August, 2008 Comscore report AOL holds 4.3% search engine market share. Yahoo is at 19.6%, Microsoft at 8.3% and Google at 63.0%. Combined Yahoo and AOL search engine market share will give additional 23.9% to Microsoft, making a combined 32.2% - something Microsoft is desperately craving for.

Microsoft’s “consumer bribery” in form of Live Search Cashback program failed to make a dent in search engine market share. According to Comscore stats reported by TechCrunch, after initial launch of the program Microsoft market share went up from 8.5% in May, to 9.2% in June, but in July slipped back to 8.9% and we can see from August report it went even father down to 8.3%.

Microsoft has tried everything to become a serious player in search, but nothing seems to work. Yahoo does not want to be a part of it, searches don’t care for cash-back incentives and even it’s browser efforts don’t make a difference.

Microsoft learned by now, there’s no easy or cheap shortcut to search engine market share. They can either continue improving Live Search (which frankly sucks) and compete with Google and Yahoo on user experience ,or they can buy ~30% market share at around $50 billion from Yahoo+AOL.

Interesting point by Matt Marshall:

Of all the players, AOL is the most desperate, and so it’s entirely possible this surfacing of a potential Microsoft mega acquisition is being sponsored mainly by AOL and its bankers in order to whip up enough frenzy to make sure something happens.

Google AOL Deal

Google supplies search results and advertisements to AOL search. AOL relies on Google for a large chunk of their revenue. If the deal goes through, Yahoo may swap Google search for it’s own, but keep adwords in tact to make more money. With recent Google-Yahoo deal, Google is already on the roll to search ad monopoly.

Microsoft acquisition of Yahoo or Yahoo+AOL isn’t such a bad thing from advertiser perspective.

Google-Yahoo Deal

Google also struck a deal to supply PPC ads to Yahoo – an agreement which will be shortly reviewed in Congress. This relationship with Yahoo is a potential stepping stone to Google’s monopoly in search engine advertising.

Yahoo’s stock is at $19 because of the extra money Yahoo says it’s getting from Google partnership. But as Yahoo continues to rely on Adwords, they give more incentives to advertisers to use Google instead of Yahoo. First, Adwords provides greater ROI, second, if Panama does not perform as good as Adwords, and by using Google advertisers can get exposure on Yahoo, why bother with Yahoo Search Marketing at all?

Partnership also reinforces Google as Yahoo’s daddy, making latter reliant for revenue.

Techcrunch makes another importnat point. Test results showed that Yahoo can increase their cash flow by simply using Google ads instead of its own. The more Google ads Yahoo shows, the more money it makes. Shareholders are greedy creatures, so it’s not hard to guess what strategy the company will select. Yahoo will be able to make more dough by simply showing more Google ads. Each time they do it, they undermine and erode their own advertising platform.

Yahoo will be making constant cost benefit decisions weighing short term cash flow v. long term competitiveness. Human nature and simple financial market psychology tells us unequivocally that cash will win and Yahoo’s ad network will lose.  Yahoo’s ad network will continue to erode further as they choose cash over competitiveness, creating a viscious downward cycle. As the fiscal quarters march relentlessly on, Yahoo will rely more and more on Google to make their revenue and earnings numbers.

Google Near Monopoly Status. Microsoft Yahoo+AOL Acquisition Seems as the Only Solution.

Google has all its competitors locked in for cash flow except Microsoft.

• Ask.com relies on Google ads to generate revenue
• AOL relies on search and ads from Google to generate revenue
• Yahoo, if the deal goes through Congress, will be financially reliant

The only force that can prevent Google from becoming a monopoly in search advertising is Microsoft. As much bad publicity it gets, it’s the only guardian angel that can save us.

With monopoly comes price fixing, because once monopoly status is reached, there’s no competitor to undercut with lower pricing.

Big G is already spiking up minimum bids and fixing prices on it’s auctions. Keywords that were 10c per click, spike up to $5 minimums. Google is able to do this with 70% search advertising market share. What will happen when it reaches 90%?

The only contender that has enough resources to take large hits at the cost of long term prosperity is Microsoft. It can afford to make less in search, but focus on client and market share acquisition. We can’t say that about Yahoo, which is desperate at the moment.

Ask.com and AOL are out of the picture.

There’s More To Search Battle Between Google and Microsoft

The real game is between Microsoft and Google. If YahooAOL deal goes through, Microsoft will have no choice but to purchase the new entity, here’s why.

• AOL search is 4% advertising market share, which Google controls
• Yahoo search is 19% advertising market share, which will keep declining in Google’s favor.

If Microsoft acquires both, it will win a large chunk of advertising space and become a real contender to Google. If Microsoft does not make a move, Google will be one step closer to total market dominance.

Of course there’s a good possibility that Yahoo may make a comeback with it’s PPC platform, taking on big G head on and leaving Microsoft with crumbs. In that case software giant will be in a much messed up position.

First, Microsoft is taking large hits from open source community, which keeps on pressing on all possible fronts. Second, it’s Google.

It was important that our strategic aspirations be relatively under the radar – Eric Schmidt, from article The Google Hive Mind

One of the strategic aspirations was Google Chrome, which was kept secret since 2001. Eric said company wasn’t ready for browser war, but now Google is more bald.

If big G manages to monopolize search advertising, either by fair market share game or by locking competitors into financial dependence it will be in a position to make even a balder move – OS battle.

We can be sure that Eric, Sergei and Larry have thought and discussed this question for countless hours, just like the Google browser.

Danny Sullivan made the following statement in his article, in response to above quote from Schmidt:

So one of Google’s strategic goals was to have its own browser, but that had to be kept secret and in fact publicly denied? That leads to the next question — what else is Google planning strategically that we don’t know about? Will that Google operating system finally emerge, for instance?

It makes all the sense for Google to shoot it’s biggest competitor in the foot, but before it can do that, it must tighten up the defenses, increase the cash flow, get more market share and tighten up all possible bolts in search. It must become stronger, build up more muscle.

I personally think if Microsoft allows Google monopoly in search, OS and Microsoft itself will be next Google target.

Search battle is about safeguarding it’s monopoly over OS for Microsoft. Search battle is about entering into OS battle for Google.

Just my thoughts, tell me what you think.

Feel like sharing some thoughts todays, so here they are:

“Whatever mind can conceive it can achieve” – Napoleon Hill

Your business starts in your mind with a thought. That thought develops into a plan. That plan develops into action. That action manifests as physical reality.

It all starts with a thought, an idea.

Whatever is inside you – manifests on the outside. If you’re negative, angry and unhappy you attract negative circumstances, angry people and unhappy life. If you’re positive, happy and grateful you attract positive people and great events. Look around you. People who talk of being broke are broke. People who talk of sickness are sick. People who complain about something get it in abundance. Yet those who talk and think rich - live rich. Those who speak of love, get love.

If you hear this for the first time it might seem like rubbish, but study masters of success such as Henry Ford, Andrew Carnegie, Frank Winfield Woolworth, John Assaraff, Theodore Roosevelt and you will see a pattern. They all talk about the same law, the same unseen force that guides your life to the heights or to the lows. It’s like gravity – it work’s whether you’re aware of it or not.

Whatever is inside you, at the deepest level, at deepest of beliefs, in the unconscious, is a direct representation of your life, right now, at this moment.

Look around. Your current life is a representation of your beliefs.

Who I am to speak of such outright “barbarous” concepts. Don’t listen to me. Go out and do your own research. Read Napoleon Hill, “Think and Grow Rich” who spent over 20 years of his life studying over 500 American millionaires including: DR. ALEXANDER GRAHAM BELL, THOMAS A. EDISON, WILLIAM WRIGLEY JR., WILBUR WRIGHT and more…

The feeling of victory is sweet. Nothing is sweeter. Nothing at all.

Also watch movie “http://www.thesecret.tv/”.

and check The 7 Habits of Highly Effective People - I haven’t finished it yet, but its a killer.

With love…