I like the Yahoo-Google deal, am I the only one?
UPDATED Fri Jun 13 15:28:09 EDT 2008 (see bottom)
So Yahoo and Google finally made the deal to put Google ads on some Yahoo search pages. Here’s what Jerry Yang has to say about it. And here’s what some dude that isn’t Larry or Sergey has to say about it. These have to be the saddest announcements of a major deal I’ve ever heard. You know how in all those writing classes they teach you to use affirmative words and positivity? Yeah, not so much in these. Yang is trying desperately to sound up beat about it and all Google cares about is getting past anti-trust.
Let’s just get this out of the way, Jerry says this:
Second, this deal is good for competition. It may seem counterintuitive that doing a deal with a competitor would improve our competitive position. But as search and display continue their convergence, it puts Yahoo! in a better position to innovate and compete aggressively with Google and others for ad dollars.
and that, you know, is technically English, but is completely non-sensical. Just so you don’t think you’re going crazy or anything.
Despite all that, I like this deal. I think there’s a lot of anti-trust rhetoric going on here that I hope is ultimately not true. Like the fact that Yahoo claims that it is going to continue to build Panama. First of all, once Google has the long tail, which will net Yahoo more money because Google’s better at monetizing search traffic, Yahoo will have less advertisers on Panama. Less advertisers means less competition and even less revenue happening on the thick head of Yahoo’s search traffic. So Panama earns less because it is serving less and what it is serving is bringing in less. But to continue developing Panama as it is now, you have to maintain staffing levels (or increase them, given the non-success it’s been thus far). So maintain or increase spending on significantly reduced revenue on the hopes that somehow it will catch up to Google. Hmm.
Second of all, just give it up. Yahoo could take all that Panama talent shift it around and refocus the company on doing what it does best or at least what differentiates it from everyone else - it’s wealth of content and the platformization of said content. I heard that the delicious guys could sure use a hand. The company was trying to compete on too many fronts, cut off the sucking chest wound of search ads and concentrate on your strengths.
Third of all the more business Yahoo provides to Google the greater leverage they get with them. As this deal matures Yahoo will most likely represent a very significant amount of money to Google. Once that gets baked into Google share price, Yahoo will have a lot more pull with the G if they all of a sudden start suggesting that Microsoft seems to be offering them a pretty sweet deal… shareholders don’t like it when a half billion or billion in yearly revenue all of a sudden dries up.
So I find it difficult to believe that they plan to continue Panama as usual. My guess is that the content of these announcements and the half-heartedness of the Google deal is for the sake of anti-trust. That doing and saying more than this would have prevented it from happening at all. And ultimately, while I agree that it was an act of desperation, it is true that desperate times call for desperate measure and that this is a huge step on getting Yahoo back on a good path. Where do you fall on the great Yahoo/Google deal divide?
UPDATE: Just read on SAI the Microsoft deal that they turned down in favor of the Google one. If that was indeed the deal, I think they made a mistake and perhaps the Panama rhetoric isn’t just rhetoric but they actually believe that what they couldn’t do with Panama serving all their search ads they will magically be able to do with reduced inventory and reduced advertiser base. Hmm…
