In an effort to justify its ad deal with Yahoo, Google is making some very public statements defending it from antitrust critics. Yesterday, Google’s advertising president Tim Armstrong tried to argue, unconvincingly, that advertisers would not see increased prices as a result of the deal. Today, he tackles the anti-competitive issues. In the same Q&A style he used yesterday, Armstrong addresses one of the big fears behind the deal:
Question: Over time, will Yahoo! just outsource more and more of its ads to Google and cease to exist as an independent ad platform?
Answer: Yahoo! has made clear that it will still use its own system to serve ads, and it will use extra revenue from this deal to improve its ad platform. The arrangement only covers the U.S. and Canada, and does not cover the fast-growing mobile segment. Yahoo! also has a strong economic incentive to keep serving as many of their own ads as possible, since they get to keep all of the revenue from those ads, while Yahoo! will only receive a part of the revenue from ads served by Google. In addition, Yahoo! has a leading position in display advertising, and will be able to offer advertisers a unique combination of advertising opportunities.
Essentially, Google’s argument here is that the deal will make Yahoo stronger because it will give it more money to reinvest in its own ad platform. But what if it doesn’t make Yahoo stronger? What if Yahoo takes that money and throws it down a rat hole? There is no guarantee that by simply spending more money on its ad platform Yahoo can make it serve more relevant ads. The problem so far has not been a lack of funds.
Well, you know what they say about things that don’t make you stronger. That’s what ends up killing you.
See all
Post
If Yahoo! can make more money by displaying ads from Google then why not? But I agree they have to be smart and invest the profit back into their not-so-good platform; otherwise, Google will end up killing them.
All the innovation is over. Yahoo! needs to buy “vertical locator engines” to compete. The Google results spam shows too many results, all you need is one. You will all see the power soon.
powerlocator.com
Are you on crack?
I think it’s more of a genetic issue with this one.
slow day. mike has them, why cant i.
i am glad my bitch the idiot finally got a name for himself. i have a domain crawl space for him but he refuses to commit. hes my ho. mike needs me, idiot needs me, i need them. we all share something special. Community.
Have a Great Weekend my Friends.
WeekendLocator.com
Yahoo died a long time ago. (And I find it funny that Google has to argue that Yahoo is still a viable competitor, not Yahoo itself.)
I think they are all in kahoots…lol
Yahoo is in such a hole that nothing will save them. If they where smart and took the M$ deal they would have had a chance to take on the mighty and powerful Google.
Whatever can keep Yahoo! independent and strong will be a good thing for this business and our economy as a whole. Keep on fighting Yahoo!!!
What is with the 3 r’s and pirate flag? Experimenting new logos and spellings?
The pirate flag and extraneous R’s are in honor of “talk like a pirate day”
Link: http://www.talklikeapirate.com/
I don’t understand why TC always posts items talking about Yahoo’s demise.
I think this is a great deal for Yahoo!. Yahoo needs to focus on its core strength which is being a great portal. Yahoo! is the most trafficked site in the world even today+the internet’s most used tool is email(search comes in second) of which Yahoo! mail is the leader.
Yahoo’s focus is on the right track i.e. they are focusing on not being the google killer(you don’t need to kill another company, you can co-exist and still make a solid impact) but an awesome portal.
Also, this gives Yahoo! the time needed to focus on fixing it’s core while aligning it’s long tail, ones they are done with it they will most certainly get back to enhancing their Ad Platform.
In a game where it’s about telling where something or someone is good at… I can’t find anything for Yahoo… really.. they do not excell in one single thing.. YouTube outmatches Yahoo Video, Gmail outsmarts Y!mail, Google outperforms Yahoo search and Adwords is miles ahead of their advertising platform…
What is Yahoo essentially? A bunch of visitors who keep returning?
A bunch of users who keep returning?! It’s just that that bunch happens to form the largest bunch of all Internet users. Even established networks such as facebook or myspace are successful following that model. If you want to put down Yahoo! give some strong arguments. It is a company with some of the most innovative and strongest assets on the net - flickr, upcoming, delicious & zimbra are all Yahoo! products. They define the core philosophy that Yahoo! believes in - innovation is the key to success. Through BOSS, SearchMonkey and FireEagle, Yahoo! has proven us time and again that their spirit is still very much intact. It is a company that will touch your heart. Except for a good advertising platform and a social networking portal, Yahoo! has everything. Unfortunately, the lack of former is truly hurting it. It is trying hard to circumvent its way around it - but many people, including Erick, don’t agree with their strategy. They have few options - they need money to ensure that their innovative product-generating engine doesn’t slow down but they can’t make that using their Panama advertising platform. Imagine how tough will it be for them to rely on their arch rivals Google for revenue - but they still have to go ahead with it. I believe this deal is good for Yahoo! Lets commend them on having accepted the inefficiencies of their own advertising platform and then try and do something about it. They will not sleep - I am dead sure that Yahoo!’s next generation advertising platform is under works as I type this. But till the time they need the cash flow and this deal will ensure that.
Getting new features in GMail is great, but Yahoo! gives us new products! They truly define what innovation stands for. It has one of the most visionary M&A teams out there who understands the intricacies of the web to buy some of the most promising products. Yahoo! won’t die - it’s assets won’t let it. Lets laud it for all it has given to us to simplify our lives (and that too for free) - I remember the first page I visited was http://www.yahoo.com and I knew this was my calling! Go Yahoo!
Regards,
Varun
MBA Class of 2010
Marshall School of Business
USC
(agg.varun@yahoo.com)
Geebus, you looking for a job already?
When I think of yahoo! i think of display adds and pop-ups and cluttered pages. Not sure what you see, but I’m not looking for job, so…
The only winner here is google.
Just look at the possible outcomes…map them out 2 degrees and you’ll see only Google wins.
The assumption that the Google deal will make Yahoo stronger is not valid and furthermore a clever ploy to rid Google of its most significant online search engine competitor. With continued outsourcing of Yahoo’s ads to Google, in the spirit of competitive markets, Yahoo will not be becoming stronger but rather further debilitating itself against the online search engine superpower Goolge. Yahoo’s problem is not its ad platform but rather its continued struggle to regain online search engine supremacy. Yahoos’ quest to regain online notoriety seems all but over with Google strategically immersing itself in Yahoo with their new ad deal. Google is the future of online search engines and Yahoo is forever going to be chasing Googles’ coat tails.
What does not kill you makes you stronger != what does not make you stronger kills you.
Are you kidding me. As someone that spends over $1,000,000 in SEM a month in the U.S., Yahoo is an average of 11% less expensive than Google. All you have to do is ask any large SEM bid management company for data and you will most likely get a similar answer. If the two engines were generating similar CPCs in the U.S. how would a deal make financial sense. Even at a 90/10 revenue split the CPCs Google would provide have to be more expensive than Yahoo - right?
Google is in a rush to get this going before Jerry is replaced as CEO and Microsoft comes back to the table. The more time this takes the worse it is for Google hence the full-court press to get this deal started.
Of course the deal with my Yahoo stronger….but it will also make Google Stronger because they will be getting a cut out of every ad served on Yahoo. Google now controls about 95% of advertising spent on the internet.