Blind Five Year Old

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.

Yahoo’s organic search results aren’t always organic. I don’t think the average Yahoo user has any idea that many Yahoo search results are paid listings via Yahoo’s paid inclusion product, Search Submit Pro. It’s sort of like buying organic apples and finding out some of them were sprayed with pesticide.

Yet, I can see my way past the ethical minefield paid inclusion presents. There is no expressed contract that states that the organic search results are 100% organic. That’s an assumption that many users make and which Yahoo simply fails to correct. There’s no 100% organic ‘sticker’ on the Yahoo search results.

The real question for me is how paid inclusion impacts search engine optimization (SEO). “Why do I get only 5% of my organic traffic from Yahoo when they’re 20% of the search market?” This is a common refrain I hear from a rising tide of companies. There are a number of possible explanations for this discrepancy.

Sites optimize for Google and not Yahoo

Google is the force in search with a 63% market share in August 2008. For that reason, sites optimize for Google first and Yahoo a distant second. The algorithm for each is different with Google placing far more weight on off page factors like links.

In particular Google seems to have a better quality link algorithm that helps place sites in appropriate neighborhoods of knowledge. Yahoo certainly looks at links but it seems tied to link popularity and link ratio. This means you have to overwhelm Yahoo with inbound links to really have an impact.

Result: Google optimization might not help you with Yahoo.

Yahoo’s index is slow to update

There’s no question that the Yahoo index is slow to update and is less agile than Google’s index. What Google indexes and categorizes in hours could take Yahoo weeks or months. It’s not that it doesn’t get into Yahoo’s index, it’s that Yahoo doesn’t categorize it so that it can be served to users for relevant searches. In many ways it might as well not exist.

Google is also constantly tweaking the search algorithm. If you’re working in SEO you’re accustomed to the changing nature of the Google algorithm. However, It’s unclear how often Yahoo changes its algorithm, but it’s far less than Google and it’s not nearly as big a deal when they do. The Yahoo search index has calcified.

Result: It could take a long time for your efforts to pay off on Yahoo.

Paid Inclusion takes up search engine result shelf space

While there are no guarantees that paid inclusion will get you top results, it certainly takes up shelf space on search results. As more companies use paid inclusion, the number of organic search results goes down, making it more and more difficult to optimize vital keywords.

It seems logical that Yahoo, particularly in its current financial situation, would want to increase the number of paid inclusion results. As a cost per click product it would mean a greater probability of generating revenue with every search engine result page.

What’s the keyword coverage for paid inclusion? What’s the average number of paid inclusion listings to organic listings? These paid inclusion statistics aren’t available, so it’s difficult to understand the real effect of paid inclusion. Instead we can only deduce from watching our SEO efforts and tracking organic search volume.

Result: Paid inclusion might not be the culprit, but it introduces another variable that defies tracking, thus obscuring all other SEO efforts.