Yahoo’s value is in it’s advertising systems which monetises its eyeballs. If it hands over the running of it’s ad inventory (even small amounts) it is destroying the only value it has.

So for some short term cash flow gains they destroy their own balance sheet by devaluing their IP not to mention the fact that they will lose great engineers.

All this does is increase Googles power and market share and by stealth Google destroys Yahoo’s balance sheet and IP.

If people think consolidating even more market share with Google is a good thing then they need their heads read and they are hypocrites. The web is no longer about content it is about data and it seems Google and Microsoft get it but sadly Yahoo! and the loony anti-Microsoft crowd don’t.

There are two kind of people who bid on long tail keywords:
1. Regular advertisers who have long tail keywords in their portfolio
2. Pure Long tail advertisers

Those who belong to the latter category just don’t bother to go on yahoo simply because it just doesn’t generate enough clicks for them, so it’s not worth their time and effort to be on yahoo..

The former category tend to use sophisticated tools and end up bidding on both yahoo and google. But because there’s an absence of category 2 in the bidding process, they end up getting the long tail keywords cheaper as well.

For these reasons, I have a hard time seeing yahoo close the so called delta with google even if it outsources to google unless google and yahoo bidding went through the exact same interface. This is why I think yahoo is much better of merging with microsoft because it can play the volume game much better and reduce the so called deltas..

Yahoo doing such a deal with Google would be retarded, like GM handling some responsibilty of a core division to Ford, but if it does happen 2 things should be attempted to be required by yahoo of google.

1. open and transparent operation with at least some chinese-walls between google’s different divisions -this would actually benefit google in the long-term, but it would also gain trust from partners, including selecting different data-retention/access policies.

2. If yahoo is essentially going to cement Googles position and make it a virtual guaranteed monopoly into perpetuity (network-effect of intelligence and data-retention), then it should get actual equity in one of the cash-generative units (adwords, adsense, etc.).

Alternatively, in my complete naivety, could someone please explain why the hell yahoo can’t provide a solution itself -what is so special beyond volume and granularity – quality algorithm + ad-auction + adsense/page-context + cookie = success!!!

Yours kindly,

Shakir Razak

If yahoo can somehow compute the terms with greatest delta as you suggest, it would be far easier to just raise the minimum bid price on those terms (in their own network).

They already know how much those keywords were making with Panama. When they put them through Google, they’ll know how much Google can make for them and figure out where the greatest delta lies. And, yes, @10, you are right they will have to look at not just the greatest delta, but where they can get the greatest absolute returns as well. That is still likely to be in keywords in the torso and the tail.

Y! could reinvent themselves, if they stay independent from MS. Once they are inside MS, all bets are off. From an internet brand perspective, MS buying Y!, would be like Chrysler buying Benz. Y! is still much beloved, but Y! MS would turn into something all together different.

Backfill. I rarely use Yahoo.com anymore to search, but when I do it’s for really strange keywords. And Yahoo never has any ads for those keywords. I go to Google and they have at least 10. So Yahoo should backfill with Google ads whenever they don’t have enough. They may not make a lot per click, but something is better than nothing.

Just my 2 cents.

Personally, I think Yahoo! needs to overhaul their search system and work on their own “algorithm”. I mean their search results are a joke sometimes and they always, always lag behind Google when it comes to giving accurate data/listings.

Since Y! may be limited to only a small % of keywords, that means high volume, high delta keywords.

Seriously. I would pay Yahoo if they would finish YUI and only let certain people have access to the full version. My entire new monster/dice competitor is based on it.

Why not charge a licensing fee, and finish YUI and make money relicensing the platform rather than trying to cash in on search.

They have a great thing with YUI that Google doesn’t have.

maybe i’m dense, but i just don’t get it. to me it seems like more grasping acts of desperation by a bunch of suits who don’t want to get canned when microsoft replaces them by someone competent.