The Microsoft conference call yielded little new information about the details of the Yahoo bid. Steve Ballmer stressed that scale and efficiency in online advertising platforms would drive the success of the deal. Microsoft execs said R&D innovations would drive breakthroughs in vertical search, mobile search, social search, and natural language search.
Nice thought; won't work in the marketplace.
More "relevant" search results and social media innovations won't solve the problem of Google's dominance in paid search advertising. Microsoft-Yahoo still need to beat Google brand equity and searcher loyalty. Search is a habit. For some, search is an online addiction.
Switching costs may be low --and search engine alternatives are "one click away" - but Microhoo will still need to win over the Google ravers and junkies.
When Microsoft or another suitor finally buys Yahoo , no one need feign surprise. The Redmond giant finally went public with a formal buyout offer because the Yahoo board (sans Semel) won't fight back. The last bid was rumored to be $50 billion. Today's offer comes in at $44.6 billion because Yahoo stock price dropped below $20 per share.
Look for other bidders to force Microsoft to pay a higher premium. While display advertising is a key driver for creating two super-portals on one efficient ad serving and ad management platform, Microsoft-Yahoo would never win government approval unless Google had achieved what some call near-monopoly leadership in paid search.
Yahoo Panama -- Yahoo's paid search auction algorithm and search ad platform would move to Redmond even if the Yahoo engineers remain in Silicon Valley. MSN adCenter is innovative, but Yahoo Panama improved topline revenue -- although not as much as Wall St. and Jerry Yang would have liked.
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