Microhoo Deal Dead

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Over 3 months after making a $44.6 billion bid for Yahoo, Microsoft has decided that 'clearly a deal is not to be done'. Microsoft's latest bid which upped the total price to $47.5 billion over the weekend, was rejected as inadequate.

So what does that mean? For one, it means I was wrong to expect that a 80% premium would be enough to convince Yahoo. And more importantly, it may mean that both sides didn't want to do the deal - which may be a good thing. Both sides have had over 3 months to get feedback from analysts, employees and even competitors as to the value of the merger, and if the point was to take on Google - they may have both figured out that this might have been a disaster.

From an online advertising standpoint, it will mean:

• Google will get even stronger, especially in the short term
  
• Yahoo might get better and be willing to change dramatically because of the scrutiny
  
• Microsoft will have to grow this part of their business themselves, and get better at it.

For us and advertisers, I think this will mean we will have a more vibrant search engine marketing and online advertising industry. More competition usually means more innovation, choices and lower pricing. It will take some time to get there and it may hurt these industry giants but in the longer term, the rest of us should benefit.

One thing is certain. Online advertising and marketing is BIG, and getting bigger. If you haven't already, hitch your wagon to it.

Labels: deal, Microsoft, online advertising, yahoo

posted by Fred @ 5:05 PM

Microsoft Buying Yahoo

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Well, it's finally happened. After a big dip in the markets, and Yahoo ready to layoff 1,000 employees, Microsoft made its move and offered $44.6 billion for Yahoo. That's Microsoft biggest bet yet, that the Internet advertising business is a large part of their future. Remember they spent $6 billion not long ago to buy Aquantive. So just those two now represent a $50 billion investment in online ads, search engine marketing and online marketing by MS.

You're probably thinking that this is a bid, not a done deal, which it is. I'm talking like it's a done deal because it will be - there is no way that the shareholders will turn this premium done, and there is no one else out there (save Google), who can beat this bid. And the anti-trust hurdles aren't there, because it's Google that needs to worry about that nowadays, rather than MS.

So what does this mean? Well for one, MS has finally admitted that they can't build a significant enough search and online ad business, because they are a band of techies who build software. And Yahoo, who is floundering because they depended more on display ads and portal content (like a media company), needs more Goog-like technical savvy. Does this mean it will work to catch Google? Only time will tell for sure, but I for one don't think so. The culture and mentality is too different. Googles need to be built by tech guys who ALL know they are in the advertising and media business.

Certainly Microsoft and Yahoo will both continue to do reasonably well, given the growth in online ads, search engine marketing and online media. But as for knocking down the big dog in this space - no.

I am hopeful that the combination will make the industry more competitive. Online ad pricing is starting to get expensive, and less effective. More competition will keep innovation up and costs down.

Labels: consolidation, Google, Microsoft, online advertising, yahoo

posted by Fred @ 9:27 AM

Yahoo Stays in the Online Ad Game

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Yahoo became the latest Internet search engine to make a big move into online advertising networks. By buying BlueLithium for $300 million in cash, Yahoo counters somewhat similar moves by Google (DoubleClick) and Microsoft (Aquantive).

So who is BlueLithium and what do they do you ask? BlueLithium has a user base of 120 million, and has the 5th largest advertising network on the Internet. In other words, 120 million users visit the website network they have strung together from many hundreds of highly trafficked websites.

What this means to an online marketer, is that the big 3 search engines, are also the big 3 online ad networks for display ads, contextual ads etc. Just as FoundPages has evolved from mostly search marketing to online marketing, the search engines have as well.

Does that diminish search engine marketing? Absolutely not. Search is still usually more effective than any other online marketing and is our calling card. However, online advertising is a natural follow on from search marketing and uses similar talents, tools and assets.

We have found in some cases than contextual advertising is more effective than even search advertising. Contextual ads are displayed beside related articles, blogs, videos and even email (like Gmail). This is similar to traditional advertising whereby an ad is 'placed' articles that will be welcomed by the audience reading the article. eg. ads on 'victoria condos' beside an article on retiring in Victoria.

You can expect to hear more from us (and Google, Microsoft and Yahoo) about online ads - all types of them.

Labels: bluelithium, online advertising, online marketing, search engine marketing, yahoo

posted by Fred @ 6:25 PM