An executive from Rainbow Shops discusses email marketing tactics and results at Shop.org.
Microsoft said today it has offered to buy Yahoo for about $44.6 billion, and projected the merger would pose a strong search marketing alternative to Google while also developing innovation in online video and mobile commerce.
Microsoft Corp. said today it has offered to buy Yahoo Inc. in a deal valued at about $44.6 billion, and projected the merger would pose a strong search marketing challenge to Google Inc. It also said the merger would generate at least $1 billion a year in combined revenue and cost savings through innovations in online video and mobile commerce as well as more effective online advertising.
Noting that the online advertising market is expected to double to $80 billion in 2010 from $40 billion last year, Microsoft indicated that market dominance of Google presents Microsoft and Yahoo with an opportunity to provide a strong alternative to the search marketing leader. “Today this market is increasingly dominated by one player,” Microsoft said in a release issued today, declining to mention Google by name. “Together, Microsoft and Yahoo can offer a competitive choice while better fulfilling the needs of customers and partners.”
Yahoo issued a statement today saying its board of directors would evaluate Microsoft’s unsolicited offer.
The proposed acquisition also could have broad implications for Yahoo Merchant Solutions, Yahoo’s e-commerce platform also known as Yahoo Store, though neither company has commented on how a merger might lead to new developments in e-commerce technology. The Yahoo Store platform suffered an outage for several hours on the first Monday after the Thanksgiving weekend last year, and Microsoft could offer a means to upgrade the platform.
Microsoft and Yahoo are positioned to build out an online marketing platform that could offer e-retailers and other online marketers a broad spectrum of advertising services that Google Inc. doesn’t offer, says Robert Murray, president of search marketing firm iProspect. With Yahoo’s experience and technology in search marketing, and Microsoft’s financial resources and capabilities in software research and development, the two could develop a more comprehensive advertising platform that integrates online display and search marketing ads and lets advertisers bid on both types of ads as a package, Murray says.
Ken Cassar, vice president of industry solutions analytics at Nielsen Online, a unit of the Nielsen Co. that produces research and analysis of web traffic, adds that a combined Microsoft and Yahoo could better compete against the proposed combination of Google and the DoubleClick ad-serving network. “Even though they have significant audience overlap and a combined search share that would not catch Google`s, they could be positioned to create the next generation of ad networks-one that rivals Google/Doubleclick-a diverse environment, made of up e-mail, search, original content and consumer generated media, where advertisers could maximize their buys over two of the most trusted online brands," he says. (Google plans to acquire DoubleClick Inc. for about $3.1 billion in a deal that recently won favor from the Federal Trade Commission.)
Murray adds that search ads often get too much credit for the “last click” that leads to an online purchase, when there are often other exposures like display ads and web portals designed for particular product categories that help to develop consumer interest along with search ads. He notes that car dealers, for example, could benefit from a Yahoo portal on automobile information that runs banner ads and attracts shoppers who might link from the portal to conduct car searches through Yahoo or Microsoft’s MSN search engines. “A unified platform allows advertisers to go in and reach people in different places,” Murray says.
Research shows that while Google dominates search traffic, a combined Microsoft and Yahoo would surpass Google in market share of Internet visits, according to Hitwise, a unit of Experian that compiles data on web traffic. The combined U.S. market share for Microsoft and Yahoo would be 15.6% of all Internet visits, with Google at 7.7% for the week ending January 26, 2008, Hitwise reports. But for the four weeks in January 2008, Google accounted for 65.98% of all executed searches in the U.S., while combining executed searches for Yahoo Search and Microsoft’s MSN Search would amount to 27.84% of executed searches for the same time period, Hitwise adds.
"If Microsoft and Yahoo join forces it will be the most important event in the Internet industry this year, without a doubt," Cassar says. “The combined entity would be visited by 86% of U.S. Internet users, account for 15% of all time spent online, and represent 59% of online display ad impressions sold, really the most significant revenue generator today for most online publishers.”
A combined Microsoft and Yahoo would still face the challenge of driving more consumers to its portals and search engines, but the opportunity is there for the two companies to combine their resources to win over consumers through the development of relevant content and search results, Murray says.
Further developing ways to distribute and monetize online video and m-commerce could help to build consumer traffic, he adds.
In an offer letter Ballmer Yahoo sent to Yahoo’s board of directors yesterday, the Microsoft CEO notes that Yahoo had said a year ago that it was not ready to discuss a possible merger with Microsoft because Yahoo at the time was expecting significant internal growth from ongoing initiative such as its then-new Yahoo Search Marketing platform. Although he doesn’t mention the search marketing leader by name, Ballmer notes in the letter that the online advertising market is still dominated by Google, creating a stronger reason for Microsoft and Yahoo to merge. “A year has gone by, and the competitive situation has not improved,” Ballmer says in the letter. “Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo can offer a credible alternative for consumers, advertisers and publishers.”
Microsoft is offering Yahoo $31 per share, for a total equity value of about $44.6 billion, resulting in a 62% premium over Yahoo’s Jan. 31 stock price. Microsoft’s proposal would allow Yahoo shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock, with the total consideration payable to Yahoo shareholders consisting of one-half cash and one-half Microsoft common stock, Microsoft says. Microsoft expects to complete the acquisition in the second half of this year with Yahoo’s approval, it adds.