July 29, 2009, 12:00 AM

What the Microsoft-Yahoo search deal means for online retailers

Microsoft’s Bing will become the search engine for Yahoo sites as part of a 10-year deal announced today that creates a more formidable challenger to Google. There are steps e-retailers can take to prepare for this major change in search.

Katie Evans

Managing Editor, International Research

Online retailers have complained Google is pretty much the only game in town when it comes to search marketing. That may change as a result of a deal announced today by Google’s nearest competitors, No. 2 search engine Yahoo and No. 3 Microsoft.

Microsoft Corp. and Yahoo Inc. unveiled a 10-year agreement that will make Microsoft’s Bing the search engine on Yahoo and give Microsoft access to Yahoo’s search technology. In June, Yahoo and Microsoft accounted for a total of 28% of searches by U.S. web users, to 65% for Google, according to web measurement firm comScore Inc.

“Bing will now compete more with Google than either Yahoo or Bing could by themselves,” says Juan Ribero, marketing director at online electronics products retailer CableOrganizer.com Inc., No. 430 in the Internet Retailer Top 500 Guide. Ribero expects Bing will grow more popular, but adds, “some pretty strong habits have been established in online search and Microsoft will really have to do something creative, comprehensive and well executed in order to ever really compete with Google.” Microsoft introduced Bing as its new search engine last month, replacing Live Search.

While Microsoft and Yahoo say it will be early 2010 before they can combine their search businesses, because the deal requires regulatory approval, Ribero says he won’t wait to make changes to his paid search campaigns. “We have backed away significantly from Yahoo and Bing advertising because the slightly increased revenue is not worth the significant amount of work to run those campaigns,” he says. “Now that we know that within a year the workload needed will be cut in half, yet the potential revenue will remain the same, we will definitely start beefing up our Bing campaign.”

ShoeMall.com and its sister sites also will pay more attention to Bing today, testing keywords, ad copy and landing pages with its search marketing agency iProspect, says Reggie Geissler, Internet program manager at Mason Companies Inc., which operates ShoeMall.com, No. 135 in the Internet Retailer Top 500 Guide, and other e-commerce sites. He says the Microsoft-Yahoo partnership will increase competition and could drive down cost-per-click rates on search ads.

However, Eric Klose, vice president of marketing at online retailer CSN Stores LLC, says Bing today is too small to shake up the search industry and will have to convert Yahoo users to Bing loyalists to challenge Google. “For now, and until and unless this deal moves forward, too few people use Bing for it to make all that much of an impact compared to Google, which should remain overwhelmingly dominant for a long time,” Klose says. CSN is No. 63 in the Internet Retailer Top 500 Guide.

Because, once the deal is implemented, Yahoo search will employ Microsoft technology online retailers should focus on how to move up in natural search rankings on Bing and on learning their way around Microsoft’s AdCenter for bidding on ads on Bing search results pages, says Matt Gross, senior media director at online marketing firm iCrossing Inc. “It is probably best to focus less on optimizing Yahoo search programs and more time optimizing Microsoft search programs effective immediately,” he says.

Bing presents search results in new ways, and online retailers can begin now testing how to take advantage of that, says Robert Murray, CEO of iProspect. For instance, the Bing search results page has a left column that suggests ways to refine a search-a search for umbrellas suggests patio umbrellas and other terms; a retailer selling patio umbrellas should make sure those product pages are clearly labeled so Bing can find them. “This deal clearly makes the Bing rollout more important,” Murray says, “and it makes it really important for marketers to engage in it, test it and really find ways to stand out from the crowd.”

E-retailers also should avail themselves today of two Yahoo offerings whose future is uncertain, says Dennis Consorte, chief marketing officer at interactive marketing agency Ecommerce Partners. They are Yahoo Directory, which offers paid listings used by Google and Yahoo search algorithms in ranking web sites, and Yahoo’s Paid Inclusion service that moves advertisers’ listings up in organic search results. It remains to be seen, he says, whether Microsoft will incorporate those features.

While Microsoft will provide the technology, Yahoo will service the larger search advertising customers of both Yahoo and Microsoft as well as the search marketing agencies that serve e-retailers large and small. That’s good news, says George Michie, CEO of search marketing firm The Rimm-Kaufman Group. “The Yahoo account reps are top-drawer folks and we’re glad we’ll be continuing the relationship with them,” Michie says.

Michie says that the larger volume of search queries that will go through the combined Microsoft-Yahoo search service will create a larger base of data set that will permit more effective targeting of ads. And working with only two major search engines, instead of three, will save time “and allow our analysts more time to focus on higher-value analysis,” he says.

The combination of Yahoo and Microsoft is too big to overlook, including for marketers who may have put all their eggs in the Google basket, says Mark Simon, vice president of industry relations at online marketing firm Didit. “Many of the advertisers who’ve done Google-only search buys until now will struggle getting up to speed with Bing and Yahoo,” Simon says.

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