Yahoo Exits Search, Replaces by Microsoft Adcenter and Bing

Yahoo and Microsoft finally agreed a deal in which Yahoo search will be powered by the search algorithm of Microsoft’s new search engine Bing. In return, Yahoo will receive a large portion of the search ad revenue.

Changes in Paid Search

Yahoo’s current organic search results and paid search results will be replaced by Bing’s search results. Yahoo will no longer have to maintain its own organic search algorithm or paid search algorithm. The Yahoo-Microsoft deal will affect how search advertisers, search engine users and the top 3 search engines (Google, Yahoo and Bing).

Bing’s search market share in the US will increase to 28% (Yahoo sites’ 19.6% plus Microsoft sites’ 8.4%). Google still has 65% of searches, but 28% will allow Bing to become Google’s closest search engine competitor.
With Bing and Google getting a total of 93% US searches, most serious search advertisers will only need to cover Google Adwords and Microsoft Adcenter.
The problematic Yahoo Search Marketing system will soon be shut down and Yahoo believes the deal is beneficial to PPC advertisers.
Second tier PPC search engines will remain as second-tier and will not be affected.

Yahoo’s Failures in PPC

Yahoo entered paid search by acquiring the leading PPC platform Overture (at the time) in 2003. In early 2007, Yahoo launched the new PPC platform Yahoo Panama (YSM) to replace Overture. Yahoo’s PPC has since become less credible and less valuable, after a series of external and internal decisions.

Microsoft MSN’s US portal was one of Yahoo’s paid search partners. In July 2006, MSN ended the partnership and started to display Adcenter’s search ads.
Yahoo Search Marketing’s Ambassador Program, Yahoo’s official PPC certification, was closed in May 2008.
Yahoo shut down one of the most popular free keyword research tools, Overture’s keyword suggestion tool, in June 2008.
Yahoo PPC automatic account optimization was quietly rolled out which raised concerns and complaints from Yahoo Search Marketing advertisers.
Search engine users will essentially be left with options of two distinct sets of search results (Google and Bing).

China Search Market

Yahoo’s exit in search will not affect China’s search market.

Ever since Alibaba Group’s takeover of the Yahoo China’s operations, Yahoo China has not grown in search market share and is still at 5.6%.
Alibaba Group has no serious plan to improve Yahoo as a search engine, but has merged Yahoo with Koubei.com, a Hangzhou-based life community site.

2009 Q2 China Search Engine Market Share

Baidu (61.6%) and Google (29.1%) remained as the top two search engines in China (in Q2 of 2009), according to Analysys.com. Baidu PPC and Google Adwords will still be the first two choices for search advertisers targeting the Chinese market.

The Global Big Picture of Search

The number of user searches increase year on year for the major search engines, but still not a single market has large enough scale to accommodate more than two major search engines’ co-existence. In both the US and China, the third major search engines’ volumes (Ask’s 3.6% and Yahoo China’s 5.6%) are far behind the second’s.

On the global level, with Yahoo fading away the new ranking for the top 3 search engines will be Google, Bing, and Baidu.

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