That’s right folks, 2 out of the big 3 used for paid search advertising are teaming up in an attempt to take down the 800 lb gorilla that is Google. Or so it seems.

The announcement was made yesterday that a Yahoo and Microsoft agreement has been reached that impacts only search results and search advertisers. Although they anticipate the closing of the agreement to occur in early 2010, the details of the agreement can be found on the newly established site, which was created by both companies to inform the public of the agreement.

So what does this mean for paid search advertisers?

This is where it is still a little hazy.  According to the press conference held yesterday by both companies, the agreement is only affecting paid search advertising, not display advertising. Basically, Microsoft’s newly launched search engine Bing, which my co-PPC specialist Siobhan Peterson analyzed in a previous post, will be powering Yahoo’s search results on the back-end. Search result pages will still be mainly Yahoo branded, as discussed in the conference, but each page will state it is powered by Bing.

In regards to PPC advertising, the agreement gets a little tricky. The Microsoft adCenter platform and auction process will serve both search engines for paid search advertising only. From what is discussed in the press release and conference, Microsoft and Yahoo will still compete against each other in contextual advertising.

This makes life for pay per click advertisers more complicated because supposedly there will be only one platform used for PPC advertising when the agreement is finalized: adCenter.

According to Carol Bartz, the CEO of Yahoo:

“This, by having one system, adCenter, as opposed to both Panama and adCenter, we really expect — and Microsoft’s commitment to an ease of use platform, we really expect that we can provide a much better experience for this tail of advertisers and, in fact, win them over to this bigger marketplace.”

Okay Carol, but what about knowing where a paid ad displays? I hope if only 1 platform is used, there will be some form of report that shows when an ad displayed on a Yahoo search results page and when it displayed on a Bing search results page.  Also, since Bing is now powering Yahoo search, will Yahoo have the same ad predictor setting that Bing has?

Let’s face it; people will still go to Yahoo thinking it is still better than a search conducted on MSN/Bing and also because of its branding, even though they are using the same technology. Does anyone really think searchers will care about the little “Powered by Bing” on the bottom of the page? Users will still type into their browser URLs. This creates a need to know where our ads are displaying, whether it is on Yahoo or Bing.

What makes this whole agreement even better (sarcasm intended) is that the Yahoo and Microsoft contextual networks PPC advertisers use are not joining forces.

So does this mean there will be separate platforms used for display ads but not paid search ads?

Picture if you will this scenario, which I hope is not the case. You want to advertise both paid search and display ads through Yahoo and Microsoft. To run your paid search ads on both search engines, you simply need to login to one adCenter account and set up your campaigns. Simple, right? Now you go to set up contextual network advertising campaigns and guess what? You now have to login to separate Yahoo and adCenter accounts because display ads are not part of the agreement.

If this scenario ends up becoming a reality, I wonder how large the decrease in display ads used on Yahoo’s content network will be. Think about it, a PPC advertiser typically sets up a paid search campaign first and then moves on to a content network campaign. If we’re no longer setting up paid search campaigns in a Yahoo interface, are we really going to be inclined to login to a Yahoo account just to set up a content network campaign? Some food for thought there, but again this is only speculation based on how I interpreted the press release and conference. It would be great to hear your thoughts on this agreement and it’s impact.

Only time will tell what this agreement means in terms of necessary accounts, settings of accounts, and a whole host of other interrelated issues.  It is our job as PPC advertisers to do what we do best: optimize.

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