Will Yahoo Paid Inclusion Survive Microsoft Deal?

// // July 29th 2009 // SEM + SEO

Bingoo!

This morning Microsoft announced a 10 year search partnership with Yahoo!

In simple terms, Microsoft will now power Yahoo! search while Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers.

But it's not all simple and straight-forward. If Bing now powers Yahoo! search, what happens to Yahoo! Paid Inclusion?

What is Paid Inclusion?

Yahoo! Paid Inclusion is a pay-per-click product that allows an advertiser to pay for a listing in the search index. That's right, you can pay to look like an 'organic' listing. Paid Inclusion is the dirty little secret that nobody at Yahoo! talks about and is only whispered about among advertisers.

Will Yahoo! Paid Inclusion Survive?

At first glance it might seem that Paid Inclusion will go the way of the dodo bird. Or will it? The second key term provides an opening.

Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies, and Microsoft will have the ability to integrate Yahoo! search technologies into its existing web search platforms;

While this statement is clearly about the Yahoo! search algorithm and (perhaps) ancillary products like SearchMonkey, it could also apply to Paid Inclusion.

The reach of Yahoo's Paid Inclusion product has never been clear and, therefore, the actual revenue Paid Inclusion generates is also a bit of a mystery. Is Paid Inclusion revenue big enough to preserve through this partnership or not?

Paid Inclusion and SEO

Paid Inclusion already obscures Yahoo! SEO. If Paid Inclusion goes away, many advertisers who were getting traffic ahead of natural listings will suddenly be at the mercy of natural SERP and SEO. There could be a substantial traffic impact for these advertisers who have come to rely on a certain amount of traffic at a predictable ROI.

Should Paid Inclusion not survive the partnership, SEO - Bing SEO specifically - will become more important. If Paid Inclusion does survive, does it do so just on Yahoo! properties or would it be integrated into Bing results as well? If it is the latter, Paid Inclusion becomes much bigger.

In the final analysis, I don't think Paid Inclusion revenue is large enough, can't see Bing integrating Paid Inclusion and similarly can't see Microsoft wanting to explain why searches on Yahoo! and Bing are materially different.

For these reasons I'm guessing that Paid Inclusion will be terminated.

UPDATE (July 30, 2009)

Danny Sullivan was able to land a question during the Yahoo! press conference.

I asked what happens to other things search like at Yahoo? What powered Yahoo News? What happens to the Yahoo Directory? Is Delicious search? And what happens to Yahoo paid inclusion?

Bartz: We have full flexibility on what to do within our own sites. Paid inclusion, we’ll decide on that later.

So Paid Inclusion still has a chance of surviving but it seems like it's on life support.

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Comments About Will Yahoo Paid Inclusion Survive Microsoft Deal?

// 2 comments so far.

  1. Maury Domengeaux // August 01st 2009

    A.J.,

    In the spirit of full disclosure, I work for a search engine marketing company and we provide adwords, sponsored search and search submit pro (aka PI) services to our clients.

    From what Hilary Schneider said during an interview this week, Yahoo plans to continue to blend unique content into Yahoo search results and retain a unique user experience from Bing. This means there is a high probability that search results on Yahoo and Bing will differ. This leads me to believe that PI has a better chance live on.

    Hilary Schneider said, “It was important to Yahoo to retain full flexibility over the user experience because it’s integral to the overall user experience at Yahoo and the way we think about search and discovery horizontally across the sites and services we deliver. Our innovation is going to be associated with how we integrate, and deliver with relevance, unique content that we have. If you think about Flickr, Answers … the set of experiences that we deliver, it will be driven by the unique components that are Yahoo and really blending those into the search results in a way that we think will give Yahoo users the best experience.”

    Here’s the entire article: http://www.forbes.com/2009/07/29/schnieder-mehdi-yahoo-microsoft-technology-paidcontent.html

    In the end, the future of paid inclusion is up in the air as you note. My guess is that it will survive, but who knows for sure.

  2. aj // September 08th 2009

    Maury,

    Thanks for your comment and the link to the article.

    Over the past few weeks I’ve come to the conclusion that paid inclusion has a better chance of survival. The Paid Inclusion team seems to be functioning as usual, though there are some mixed signals when it comes to negotiation of IOs and time frames.

    I suppose the latter might be a preventative measure to ensure a smooth transition once Bing is integrated but … it also leaves the door open for full closure.

    On the positive side, PI is clearly a source of revenue that has relatively low overhead for Yahoo! On the negative side, search really isn’t Yahoo’s continuing focus so it may be more trouble than it’s worth.

    No matter how it shakes out, the world of search is changing and that’s always interesting. Thanks again for your comment.

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