Your AdWords ROI Is Better Than You Think

Posted by Brian Carter on 11 Aug 2009

If you understand the AdWords conversion tracking cookie, you know you can’t report a monthly AdWords ROI accurately until 30 days after the month ends.

That’s not practical for agencies and freelancers. In August, they want to know how they did in July. So you tell them. You know they did better than that. But how much better?

BUT WAIT- before I answer that, there’s another ROI disparity you need to know about:

If you’re asked to report on ROI on a weekly basis, the first week is always going to look worse than the last week. Why? Because it’s a shorter date range. Someone who first clicks an ad on August 4th might not buy til August 15th, and if you report before then, you won’t see that conversion. It lowers your CR and ROI.

So there are two levels of inaccuracy here that your client needs to know about.

I told one of our big clients about both today. I thought the ROAS looked low, and I decided to compare a number of our first week reports against last week of month reports… here are the results:

[And so you don't get too judgmental about my ROI numbers, these are general terms, not brand ones!]

As you can see, by the end of the month, ROAS was up 40% on average by the end of the month… and thirty days out it was 20% higher than we reported it right after the month ended.

These are extremely significant ROI differences that come simply from when you do your reports. Make sure your client knows if they seem disgruntled at how a month begins, and don’t you freak out either. :-)

*NOTE about ROI and ROAS: ROI means return on investment. ROAS is one calculation of ROI = revenue / adspend. I use it because AdWords favors this metric (they call it Conv Value/Cost just to further confuse you). Analytics uses a different calculation for some strange reason… ROI, which factors out the cost of the ads. I don’t think the Google AdWords and Google Analytics people talk to each other much.

Resources: http://www.searchenginejournal.com/your-adwords-roi-is-better-than-you-think/12460/

Optimizing For Re-finding Search Behavior

Posted by Shari Thurow on 7 Aug 2009

Over the past year, I have been observing some of the day-to-day activities of web searchers. Of course, I want to know how these searchers discover and locate desired content via the commercial web search engines.But I also want to know why they exhibit specific search behaviors. Lately, one search behavior keeps popping up: re-finding behavior. I commonly see re-finding behavior for web search, image search and video search.

Here’s an example. One usability test participant likes to view funny videos. She wanted to show me a really funny cat video after she learned that I have a tabby cat. She did not remember the name of the video or the title of the video. But she did remember the search engine she used to discover the video (Yahoo! Video) and the keywords she used to discover the video. So she went to Yahoo! Video and performed a search. I watched her scroll through multiple pages of search results. She wasn’t using keywords to identify the correct search result. She was scanning the video thumbnails, trying to recognize the particular tabby cat in the video.

Clearly, this participant was exhibiting re-finding behavior. Re-finding involves content that has been located and/or viewed previously, and it is a more direct process than an initial discovery. Re-finding involves both recognition (is this the content I am trying to relocate?) and recall (where did I see this content before?)

Re-finding behavior is more common than many search engine optimization (SEO) professionals might imagine. Log files, keyword research tools and web analytics data rarely reveal specific re-finding keywords that direct observation, usability tests, and field interviews provide. All too often, I observe keywords that SEO professionals might believe show informational or transactional intent. Upon further observation, I see many of these keywords being used to re-find desired content. And re-finding, as a querying behavior, clearly indicates navigational intent.

Re-finding as navigational intent

As I mentioned in Don’t Forget SEO For Navigational Searches, people who perform navigational queries want to go to a specific web site or a specific web page. Re-finding queries are inherently navigational queries, because web searchers want to return to content that they have found previously.

Web searchers might have a difficult time remembering the exact keyword phrase used to find desired content due to work interruptions and/or the passage of time. Determining re-finding keywords is tricky because you cannot use web analytics data and keyword research tools to determine specific re-finding keywords. You have to talk to your users. Sometimes, refinding happens very quickly, within the same day. Sometimes, refinding happens months after the initial search query.

Here is an example:

One test participant gets prescriptions filled for a family member. She must buy diabetes syringes as well as insulin. But she doesn’t need to get insulin all of the time. She refills the insulin prescription only a few times a year, and diabetes syringes need to be replenished every 6 weeks or so. She looks up the pharmacy’s phone number on the web every time she needs a prescription refilled (Google is her current search engine of choice). Her keywords include the name of the pharmacy, and the city and state where the pharmacy is located. “I used to type in the name of the street in Google because it is so easy to remember: Main Street,” she said, “but Google keeps messing it up. I get the phone number right away if I don’t type in the street name.”

This searcher’s re-finding keywords are:

• Pharmacy name (which, by itself, would only lead to the main corporate site)
• City name
• State name

Now, if an SEO professional saw these keywords in web analytics data, he might likely interpret these keywords as showing informational intent. Additionally, since this web searcher only wanted the phone number and got her desired information on the first try, the “time spent on site” metric might be interpreted as poor, since she looked up the phone number and left the site immediately. In reality, this searcher is obviously happy with the search experience—she keeps using the same keywords every 6 weeks or so.

Repeat queries can be an indication of re-finding intent. But keep in mind that search engines regularly update search listings to include new and updated content; to remove spam and removed content; and to accommodate personalization and relevancy feedback, among other things. Ranking changes slow the re-finding process.

Re-finding via the commercial web search engines usually does not occur with daily tasks. It is more common with medium-frequency tasks, such as the one I mentioned above.

Tips for optimizing for refinding queries

As I mentioned previously, I commonly observe re-finding behavior in web search, image search, and video search. Here are some tips to remember to help web searchers re-find your site’s content:

• Since re-finding shows navigational intent, make sure your titles and URLs (web addresses) contain keywords. With navigational queries, the URL structure is very important. In fact, searchers who wish to re-find content often remember part of the URL structure.
• For image search, remember to use keywords in alternative text. For those of you who do not know what alternative text is, in (X)HTML, it is the text placed inside the image tag. If a graphic image does not appear on a browser screen, the alternative text appears in place of the graphic image. Although alternative text does not help a page rank higher for web search, it does have an impact on rankings for image search. Captions can also help.
• With video search, meta-tag content actually affects rankings in the video search engines. Ideally, use important keywords in the video title, meta-tags (keywords and description), and on the page where the video appears, whenever possible. If the website allows, make sure the video thumbnail also contains appropriate, keyword-focused alternative text.
• Finally, talk to your users. Ask them to show you how they re-find specific information on your website, and observe them objectively. And if you cannot be objective? (Hint: the people who develop the site are not objective.) Then hire a search usability professional who is. Believe it or not, many of your users will be more than happy to help.

Resources: http://searchengineland.com/optimizing-for-re-finding-search-behavior-23025

Understanding Social Media Communities

Posted by Liana Evans on 3 August 2009

Social communities, whether they're online or offline, have interesting dynamics. To make any kind of headway, you must understand and respect how each individual community functions before charging in and saying, "Hey, can I join the party, too?" Several factors can affect whether you're accepted into the community, or left on the outside looking in.

Companies entering the social media space must first figure out where their audience is, but that's only the beginning of any type of strategy. A lot more goes into developing the type of respect, authority, and relationships in communities that generate successful strategies and attained goals for companies.

When working with communities in social media, it isn't as easy as signing up for an account and announcing that you've arrived in the space. If you charge in with your marketing message waving in your hands like old-time paperboys on street corners, shouting your message, you'll garner more than just a few cold shoulders. You'll be branded an ignorant marketer and likely won't ever find acceptance in the community.

Working with communities of any kind, whether it's a forum, a group on Facebook, or a bunch of people on Twitter discussing a particular subject every week, takes care and time. It involves developing true relationships with your audience by helping community members with information they need or solving their problems.

By taking this approach, you can slowly establish their trust in you, and build a solid foundation of a great consumer relationship. However, it doesn't happen overnight, no matter what brand or company you are. Along the way, here are a few tips you can follow:

Read the Rules

Almost every social media site has rules. Whether it's a Flickr photo group or a new account on a forum, rules are posted somewhere on the site.

The best first step you should take is finding those rules and printing them for your whole social media team to read. These rules will clearly define what is acceptable in posts, profiles, and actions on the site.

For example, some forums allow two links in your signature, some don't allow any. Some communities want you to establish your profile before you can reply with links in your conversations. If you start by posting a link to your site or media, you could very well find yourself booted out of the community.

Observe, Look, Listen, and Learn

We were given eyes and ears to observe and listen to what's going on around us. Taking the time to understand what's going on in a community can better help you formulate and tweak your approach. It can also help you better define your goals, as you can possibly find other ways to successfully engage your audience in that particular community.

This can also be a great way to observe a true focus group in action. Sitting back and watching can teach you a lot about how people use, work with, recommend, as well as criticize your products and services. All of this happens unabated; they don't feel like they have to provide a "right" answer like focus groups do.

Obey the Norms

Every community has those unwritten rules. The only way to learn those unwritten rules is by first observing, and then by interacting and engaging community members.

These norms can be as simple as jargon, that special language a particular company or industry uses to describe everyday things. It could also be as complicated as how you link to sites (i.e., when are you allowed to and how do you do it if there's a certain method).

Communities can be very fickle. If you break one of their unwritten rules, you'll find yourself dealing with an incredibly cold shoulder.

Learn the Pecking Order

There are influencers, administrators, leaders, followers, and "newbies" in all communities. By observing, you can get a handle on who's who in a community. Understanding that can help you better strategize how to approach the community when you're ready to engage them.

You certainly don't want to insult the influencers and leaders of the community, so understanding how to approach them is critical. Administrators have the power to boot you right out of the community, so it's wise to have a plan to approach that group as well. Providing information to the followers and newbies is also key to a successful engagement in social media, but you need to take care in planning that approach, too.

Don't Market to Communities

Last, and probably the toughest for all marketers, is the fact that you need to learn that communities don't want to be marketed to. They came online to these communities to share their experiences with their hobbies, passions, and interests with other like-minded individuals, and to escape the constant droning of marketing messages on the TV and radio. Come in to their safe haven waving marketing messages, and they'll hate you.

Community members really decide the value you provide. It's not through a carefully crafted marketing message that you're going to have these members finding value. It's through establishing trusted relationships and providing them with the information they need that you will find the success you seek in social media.

Resources: http://searchenginewatch.com/3634590

The Microsoft-Yahoo Search Deal, In Simple Terms

Posted by Danny Sullivan on 30 July

What a day! Still trying to digest all the news about the Yahoo Microsoft search deal? So are we. While answers are still coming in, here’s what we know so far.

In a nutshell, what just happened?

Yahoo and Microsoft both have behind-the-scenes technology used to generate those listings you get when you perform a search. Yahoo’s going to give up their technology and use Microsoft’s.

Why’s Yahoo giving up that technology!

Running that technology is costly. Rather than own the technology, Yahoo feels its more economical to lease it from Microsoft.

Doesn’t it also cost Microsoft a lot of money to run the technology?

Yes, it does. But Microsoft has no choice but to run it. It wants to compete with Google. To do so, Microsoft built its search technology several years ago. It’s already doing the work, so leasing its results to Yahoo is sort of like icing on the cake. It gets Yahoo to contribute some money toward work it had to do anyway.

But doesn’t Yahoo compete with Google like Microsoft and need search technology of its own, too?

Hush, don’t let Yahoo CEO Carol Bartz hear you say that! She might drop the F-bomb on you. Bartz has been positioning Google as a “search engine” while Yahoo is, um, a “place where people find relevant contextual content about things they care about.” Um, “the center of people’s lives.” Um, um….

How about portal? People used to use that word, portal. It meant a place where you go to get your email, maybe check your stock portfolio, have an account for instant messaging, and lots of other things. Yahoo’s got a ton of amazing “properties,” which are topic-specific areas of information such as news, sports and finance. They want to focus on that. By outsourcing search, Bartz argues Yahoo can do a better job with its content areas. From today’s press conference, she said:

This deal enables us to keep a healthy revenue stream and invest in areas critical to our future, while Microsoft invests in search technologies.

We want to invest in what is really important to our future success, including winning audience properties, display advertising capabilities, and mobile experiences.

You distracted me with that F-bomb reference! What’s up with that?

She did it once to analysts back in April. Many folks like the tough spirit it seemed to show. Made for fun in a stage whisper at the D conference, too. It didn’t make an appearance today. Maybe in the future, if the deal doesn’t go well.

Don’t Google and Microsoft both have these “portal” features, too?

Yes, yes they do.

Well if they have portal stuff and search, and Yahoo has only portal stuff, doesn’t that mean Yahoo’s weaker?

Maybe. Maybe not. Google’s kind of a stealth portal. You don’t easily know they have things like Gmail or news or a finance area. They lack much of what Yahoo has. Microsoft has its whole MSN area, and that’s not going away — but Yahoo’s also been largely ahead of it. Perhaps staying firmly focused on portal stuff will indeed payoff the way Yahoo hopes. But let’s talk more about this in a bit, OK?

OK. So Yahoo won’t have search?

Yahoo will have search. It’ll just be provided by Microsoft.

Oh, so when I search on Yahoo, I’ll be taken to Microsoft?

No. You’ll do a search, and you’ll get results back just like you get now. The main difference is at the bottom of the page, it’ll say “Powered By Bing.”

What the hell is Bing! I thought this was a deal with Microsoft?

You’re new around here, right? Missed all those Bing TV commercials? Bing is the name of Microsoft’s search engine.

Bing? Seriously?

Hey, I suggested they call it Microsoft Search. But it’s kind of grown on me. And I also suggested that Microsoft CEO Steve Ballmer keynote at one of our Search Marketing Expo events, and he is at SMX West 2010. He also looks like a genius now for getting Yahoo at a firesale price. So let’s not question Microsoft’s naming move.

You guys do search marketing events?

Yeah, see the SMX site. The next big one in the US is in New York this October. But I think the product drops are getting annoying. Should we move on?

Yeah, so Microsoft has this new Bing search engine — but it’s doing a deal with Yahoo? Is Microsoft giving up on Bing?

Shhh, don’t let Ballmer hear you say that! He’ll throw a chair (that’s just a rumor; it was never confirmed). Or perhaps stab you with a giant pen (he didn’t stab anyone, but this picture of him holding a giant one to sign the deal with Yahoo is dang funny. So are the comments).

Look, Microsoft has had its own search engine for several years. That’s all part of the plan to take on Google. Last month, it was given a facelift, some improvements and the new name of Bing. We even have a big article to tell you more about it: Meet Bing, Microsoft’s New Search Engine.

Bing will continue. It’s not being closed or reduced in any way because of this deal.

So when I’m searching at Yahoo, I’m also searching at Bing?

Kind of. Like I said, Yahoo’s listings will really be Bing’s listings, just all dressed up to look like they’re from Yahoo. Think about how some manufacturers make the same product sold to different brands.

But if it’s actually Bing at Yahoo, why would I go to Yahoo? Why not just go to Bing and search?

Microsoft certainly hopes you will! As for Yahoo, Bartz’s view is that people aren’t coming to Yahoo to do searches. They’re already at Yahoo to do something else, like check their email or horoscopes. While they’re visiting, they may want to do a search. So Yahoo doesn’t have to be better than Bing. It just has to have search available.

So Microsoft and Yahoo compete yet cooperate?

Yes. It’s called coopetition. Isn’t that a cute word? See cooperate + competition? It was all the rage in the past. It kind of died out lately, especially in search, when everyone felt they had to own their own search technologies. It’s making a comeback, baby!

So when’s this big change happen?

Both companies hope to close the deal in “early 2010.” Then they’ll implement the deal in major countries around the world, the US being one of them. They say the transition will take three to six months. So those Bing results should be showing up on Yahoo between summer to fall of 2010.

That’s a year away!

Yes. There’s a lot of approvals to get, but we’ll talk about this in a bit. Also, transitioning the ad side will take longer.

Ad side? What the heck does that mean?

Sorry, it’s been a long day. Lots of buzzwords and jargon flying around. OK, remember I said that Yahoo and Microsoft both had their own technologies to create those search listings? (Google has its own too, by the way). There are actually two different types of listings that show up, each with its own technology. Call these free listings and paid ones.

Free and paid listings? You’re losing me!

It would really help if you came to one of our conferences. We do a boot camp track covering all these fundamentals. There’s really good food. We guarantee satisfaction. But here’s the short story. You know when you read a newspaper, how there are the news article and then those ads off the side?

I thought newspapers were dead?

Well, they have some troubles. But it’s a good metaphor to use.

OK, so news articles versus ads in newspapers are like what to search engines?

Well, Google, Yahoo and Microsoft (the top three search engines) all have free listings. Or “editorial” or “organic” listings. These are results that show up because the search engine thinks it makes sense editorially for them to be there. That the user wants them there, and if they’re not provided, the searcher won’t be happy. There’s a search technology used to create these listings.

I get it. There’s also paid listings with their own technology!

Clever you. Right. Advertisers can also pay to show up for certain words. So if you sell comic books, you could buy an ad that would appear whenever someone searched for the words “comic books.” There’s an entirely different technology used to manage all those listings.

So when’s that paid listings technology from Microsoft coming to Yahoo?

That’s expected to take about a year after the deal closes. So in the major countries, paid listings will come from Microsoft by early 2011.

When’s everything completely transitioned?

All listings will be “powered” through Microsoft’s technology on Yahoo sites around the world two years after the deal closes, so early 2012, if things go as planned.

Like the movie 2012?

Yeah, out in November with John Cusack. Who I have a serious mancrush on. So it’s going to be an awesome film.

I feel this Q&A format is taking too long to go through!

Look, haven’t you seen enough bulletpoint summaries at this point? I’ve read enough. Can’t we have a little fun. We’re almost over the hump, I think. Plus, did you know at the end of the 2012 trailer they say “search: 2012″ and that if you actually search for 2012 on Google, they come up in the top listings? And if you do that at Yahoo, you get this really cool “movie” box at the top. See, this is relevant because it highlights how even when it’s powered by Bing, Yahoo might do things to make its search different from Bing.

I thought Yahoo didn’t care about being different from Bing and competing with them or Google?

Well, it gets confusing. That’s because Bartz also said that Yahoo will keep improving the search user experience. See, here’s what she said from the press conference:

Through this agreement, Microsoft will provide the search technology that will enable us to innovate for an even better user experience for all those who come to Yahoo!

So they do kind of care about being different. And Yahoo has a variety of things that set it apart from other search engines like Search Assist, which suggests terms for you to search on.

How can Yahoo offer Search Assist if it is giving up its search technology?

Good question. Microsoft will be in charge of providing Yahoo with search listings, but it won’t be dressing them up, so to speak. All the “UI” stuff remains up to Yahoo. UI is short for user interface, which is the look-and-feel of those search results. Sometimes UX is used, which stands for “user experience.” So Yahoo will still have search folks, but they won’t be focused on the process of gathering listings. Rather, thing of them as stylists.

So things like SearchMonkey will keep going?

Oh, look at your. One minute you don’t know the difference between free and paid listings. The next, you ask about SearchMonkey. That’s a way of dressing up listings. And since it’s dressing up, it might seem like it remains with Yahoo. But it also involves the Yahoo API, and that’s apparently moving to Microsoft’s responsibility.

Huh, API?

Don’t worry your pretty little head about things like that. OK, I won’t get into what the acronym stands for. It’s just a way for computer programs to talk to each other automatically and do magical cool stuff. Yahoo has a number of “search APIs” people use now, and these go away when the transition happens.

Will Microsoft provide all the same APIs?

Yes. Maybe. Probably. We’ll see. Geez, why do you want all these specifics!

Look, Microsoft has told us (and News.com) on this issue that they want to review everything and keep supporting all the stuff that seems cool and worthwhile.

What about that BOSS thingy I’ve heard about?

So BOSS stands for Build Your Own Search Service, but since BYOSS looks weird, the Y gets dropped. It lets anyone build their own search engine using Yahoo’s search technology. But since Yahoo’s no longer going to be building their own search engine, well, they can’t really provide that to others. If BOSS continues, that will be up to Microsoft to maintain.

(NOTE: See also our new What Site Owners, Web Developers & SEOs Should Know About The Yahoo Microsoft Deal story).

So all this search technology Yahoo has is going to waste?

Well, Yahoo won’t be using it. But as part of the deal, Microsoft gets the exclusive right to use it for 10 years.

So will Microsoft integrate the Yahoo search technology into Bing?

Um, um. Well, at the press conference, Yahoo’s Bartz said:

They will integrate our technologies into Bing and adCenter, which will serve both our search networks and theirs.

By Bing, she means the technology used to make free listings. by adCenter, she means the tech behind paid listings.

Later, Microsoft’s Ballmer said:

Our engineers know Bing, and so obviously our engineers will build from the Bing platform. But, there’s a lot of both engineering know-how, code, et cetera, and in the details, no, we haven’t looked at Yahoo!’s code, and blah, blah, blah, blah. But we wanted to make sure that we could put together the integrated value of our expertise and code and Yahoo!’s expertise and code. So, when Carol talks about engineers joining the team, that’s expertise. We have a license to code. There are smart things, certainly I think it’s well-known that Qi Lu, who runs our online business, spent a lot of time at Yahoo!, has a lot of respect for the intellectual property and value that’s been built into Yahoo!’s site. Exactly what that looks like, whether it’s rip and replace the six lines of code, or choose the expertise, and integrate, but we’ll build from Bing, integrate good value, good technology from Yahoo!, but because it’s not the way the deal is structured, the burden is on us to deliver the goods and to enable Yahoo! to be successful, and make the RPS guarantees, but we’re very pleased that it’s not just a rip and replace. We have the luxury of getting full integrated value out of this thing.

All clear? Potentially, some parts of Yahoo’s technology could be incorporated into Bing. Some of it probably will get used But as best I can tell, Microsoft doesn’t have to anything at all. By getting the exclusive rights to Yahoo’s technology, the most important thing for Microsoft is that Yahoo is giving up its own rights to use the technology.

What happens to the technology after the 10 years are up?

Good question. That’s not clear either. Potentially, Yahoo could take back control of its technology. If it does this, it’s not clear if Microsoft would then have to rip those parts out of its own systems.

Realistically, it doesn’t matter. Search technology evolves fast. Remember DOS? Don’t? Man, I’m old. Well, DOS was an old computer operating system where you had to type everything in, the mouse didn’t exist at first to move stuff. It was pretty clunky. Well, Yahoo’s technology is 10 years will feel like DOS compared to the “Windows” operating system we use on Windows PC or the Mac today.

Yahoo won’t want it back. It’ll be too old. They’ll either need to start again from scratch (and be hugely behind Google and Microsoft) or continuing partnering with someone else who has good search tech.

But Yahoo’s not worrying about all this because they figure this deal will turn into a “lifetime partnership.”

What’s up with all this talk about scale? Do the two combined really improve search as they say?

The partners argue that somehow, more advertisers will translate into better search results which will translate into more consumers. I’ve been writing about search a long time, and this part makes my head hurt. My eyes scrunch up, and I try to figure out what I’m missing. Let me translate what they say into the real world.

It’s like saying that by having more TV advertisers you’ll get better TV commercials with means you’ll get better TV shows. Now to me, the TV ad quality and the TV show quality are pretty much unconnected. They don’t help each other. That’s slightly simplistic when it comes to search, but it’s not that far off the mark.

So no, I’m not buying the suggestion that all this scale stuff will improve search results.

How about scale being needed to beat Google in advertising?

See, you’re getting savvy again. Yes, it’s likely to help here.

See, if you buy an ad with Google, you reach around 70 percent of the search market in the United States. If you want to reach more than that, today you’d have to open an account with Yahoo to reach another 20%, then another account with Microsoft that lets you reach about 10%. OK, those are rough numbers, but they’re not that far off the mark.

It’s a pain opening all those accounts. But in the deal, you’ll be able to buy both Yahoo and Microsoft at the same time. That lets you reach 30% in one go. Long time paid search guru Andrew Goodman certainly likes it:

We know the power of the search ad platforms, and we know they’ll work better for us with two main ones to deal with, not three. It isn’t too much more complicated than that!

Certainly there’s scale in that advertisers who want to reach a mass search audience have a single source alternative to Google. Buy from Google, and in the US,

And Microsoft will sell all these ads?

Um, um. No. This is one of the most confusing parts. You can buy search ads in two major ways. First, you can go to an online form, open an account, put in your credit card info and start buying ads. You’ll never talk to a sales rep.

The other way is for generally larger advertisers who work with an account representative. They’ve got a personal assistant, so to speak.

In the deal, anyone who primarily works with a human representative will be called a “premium search” advertiser. Yahoo will sell those people. Microsoft cannot. Meanwhile, all those people doing self-serve? They’ll use Microsoft’s forms.

How do I know if I’m a Premium Search advertiser that Yahoo handles?

Don’t call them, they’ll call you. Seriously. Microsoft and Yahoo will be reaching out to all their advertisers about this, they say.

How can Yahoo sell search if they are giving up their technology?

They’ll take care of the customer service part. Behind the scenes, they’ll be using tools that access the same system that self-serve people do — a system that uses Microsoft’s technology.

How long will Yahoo do this selling?

Yahoo and Microsoft say Yahoo is guaranteed this for five years. Then if Yahoo wants, it solely can decide to extend it for another five years.

This seems kind of complicated. What if Microsoft wants to bundle search with other types of ad sales?

Yeah, it does sound awkward. It kind of sounds like mutually assured destruction. With Microsoft locked out of talking to major advertisers on search, they need to help assure that Yahoo’s successful. That seems to be one of the few big gains Yahoo won in this deal, to me. But more on that in a bit.

Aren’t there other types of ads related to search, like contextual or domaining ads?

Look at you, a big fancy word like domaining. Yes. Contextual ads look like search ads — all texty — but they show up on pages across the web. Yahoo doesn’t do that much here, but it is a player. That’s going to shift into Microsoft’s control.

Domain ads. Well, you know sometimes you go to a web site by guessing at a topic and slapping on a .com to the end. You know, for example “wireless mouse” might make you try “wirelessmouse.com.” Some of these sites are great names that attract lots of traffic but they don’t have any really good content. Yahoo does deals to fill them with ads. Yahoo will continue to handle these.

That’s a lot of talk about how paid listings will change for marketers. What about free listings and this SEO stuff?

SEO stands for “search engine optimization,” and it’s all about improving a web site’s traffic from those “free listings.” We have a future piece coming that looks at some potential SEO issues along with one about paid search issues (getting traffic from those paid listings). But since we’ve been without bulletpoints so far, let me do a few quick hit SEO observations:

• If you do well on Bing now but not Yahoo, life in the future looks good
• If you do well on Yahoo now but not Bing, life may get sucky

It doesn’t make sense to start running out and “optimizing” for Bing right now. You’re aiming for a target that’s over a year away. But when the change happens, there might be a compelling reason why some people feel they should strongly consider optimizing content for Google differently than for Bing.

Often, pages that rank well on Google might not do well on other search engines and vice versa. Potentially, by changing the pages a bit while still staying within the general guidelines of a search engine, the page might start to rank better where it’s not performing. But those same changes might hurt where it’s doing well.

Since Google is the biggest source of traffic of all the search engines, many site owners don’t think much about the other players. But with the deal, suddenly one search technology will be responsible for another big chunk of potential search traffic out there. Optimizing specifically for a particular search engine might make a return from when it last died off back around 2000 or so.

Want some more SEO thoughts? Rand Fishkin over at SEOmoz has a top 10 list of SEO considerations from the deal.

(NOTE: See also our new What Site Owners, Web Developers & SEOs Should Know About The Yahoo Microsoft Deal story).

What about Yahoo Site Explorer!

Yeah, that’s awesome, right? Yahoo Site Explorer is a free tool that lets you see all the people linking to anyone. Neither Google or Microsoft offer anything similar (you can see links to your own sites but not to others). Yahoo could keep offering it if they want, since they can offer ANY search service they want built on top of Microsoft’s search technology. No idea yet if they’ll continue it, however. Stay tuned.

And this paid inclusion stuff?

You’re coming along really well! Paid inclusion is a little known way that lets you buy some of those “free” listings I talked about. You’re not guaranteed a ranking, but it can ensure you have more “tickets” — so to speak — in the lottery. I know, I know — it’s confusing. So confusing and controversial that Google never offered it and Microsoft dropped it several years ago.

Will it continue with Yahoo when Bing is powering things. Bartz told me during the press conference that a decision on this will be made later.

What happens to all the other search things at Yahoo, like news search. Or that Delicious thing!

We’ve gotten it clarified that “search” in this deal means web, image and video search. Yahoo will be using Microsoft’s technology for all of those things. Anything else not listed remains up to Yahoo to run with its own technology. That includes other Yahoo search services like the human-edited Yahoo Directory, the community-based Yahoo Answers site, the Delicious bookmarking site, the Flickr photo sharing site and so on.

But then again, things like Yahoo Local, Yahoo Shopping and Yahoo News all have some results that depend on “crawling” the web — the underlying technology that Yahoo is giving up and outsourcing from Microsoft. These services, as much as they depend on information gathered from across the web automatically by crawling, will now be backed by Bing.

Stay tuned. As the deal progresses, hopefully there will be more clarity. But also be prepared that much might not be decided until after the deal is done and during the transition period.

How much is Yahoo making by doing this deal with Microsoft?

All about the money, eh? This is really hard to determine right now.

Yahoo is guaranteed to receive payments for the first 18 months of the deal to match a “baseline” of what it was earning before the deal starts, we were told. How far back does the baseline go? We couldn’t get details on that.

BNET tries to make some estimates and comes up with a figure of around $700 million annually:

That could be a profit swing of $700 million annually. Given the company’s revenue in recent quarters, that could be roughly equivalent of adding a full 10 percent to the bottom line, which is major. Of course, that’s assuming that the $500 million number is actually additional.

An easier number to understand is that Yahoo will keep 88% of the search revenue generated off the sites it owns or operates. Microsoft gets the remaining 12%. TechFlash estimates this will earn Microsoft around $240 million per year.

So who won? Microsoft or Yahoo?

Officially, it’s all smiles that this is a long-term partnership where everyone wins. Said Bartz to the Seattle Times, in a longer interview with her and Ballmer that’s well worth reading (TechFlash has a nice post-conference interview with both, as well):

Listen, these things only work if both sides feel like they’ve won. And “won” means “fair.” What I really like about watching this unfold is, sure, it doesn’t mean there weren’t spirited discussions about it, but everybody is still smiling and joking, starting with Steve and I.

I think it’s no question that Microsoft got a huge bargain. Rather than paying billions to acquire Yahoo’s search technology and traffic, it’s paying nothing. The 12% share? That’s coming off of Yahoo’s earnings.

Seriously, neither Microsoft nor Yahoo uttered the billion figure in today’s press conference. Yet billions were being tossed around in all the previous deals that were being considered! To really understand what little Yahoo’s getting in this deal compared to a similar one last year, see our Microsoft-Yahoo Deals 2008 & 2009, Side-By-Side article.

Wasn’t there something about boats in all this?

Yeah. In May, Yahoo CEO Carol Bartz said she was willing to sell but only for “boatloads of cash.” Today, she said she’s going for “boatloads of value.” Thinking long term, you see.

What do investors think?

So far, they’ve been cold. Yahoo’s stock has dropped in price by 12% or $2. Some investors were expecting a large upfront payment. Last year, Microsoft would have paid out $1 billion to acquire Yahoo’s search technology. This year, it pays nothing. Microsoft was also going to buy $8 billion in Yahoo stock. This year, that’s not happening. Investors seem to want both boatloads of cash and value.

Need more? The Wall Street Journal has a summary of what some financial analysts think. TechFlash has one, too. Reactions are mixed.

Will there be layoffs?

Yes. Bartz said some Yahoo employees will move to Microsoft. Some will move to other jobs at Yahoo. And some, in departments not named, will lose their jobs.

At Microsoft, some layoffs might also happen, probably be on the direct sales side, I’d say. From an email Steve Ballmer sent to Microsoft employees, he hopes most workers will move to new jobs but not necessarily all:

Yahoo will assume responsibility for search advertising sales to certain premium customers on behalf of both companies. Given the huge opportunities in search and online advertising, we plan to redeploy most if not all affected employees into new high-priority functions.

Does all this really help competition in search as Yahoo and Microsoft say?

Oh, the blood that’s already been shed over that questions!

Last year, Microsoft lobbying helped quash the deal Google wanted to do with Yahoo, when the US Department Of Justice decided a mere partnership between Google and Yahoo would be anti-competitive.

The proposed Microsoft-Yahoo deal is more substantial than the Google one. Yahoo has to give up its search technology entirely. Google’s deal left this with Yahoo. There’s a case that this means the deal is removing a competitor from the space, which might not go over well with regulators.

There’s also a case that since the deal won’t generate a dominant share of the search market for Microsoft, it seems likely to go through. But then again, in the baby food world (seriously!), apparently the number two and three companies weren’t allowed to join up back in 2000. The Financial Times has a nice look at this.

Ad Age has a look at how Microsoft’s arguments against a Google-Yahoo deal might now be used against a Microsoft-Yahoo one. The Register also highlights Consumer Watchdog already objecting to the deal and US Senator Herb Kohl saying “careful scrutiny” is needed.

Is Google going to fight?

Expect it. Google’s already rattling the competition issue:

There has traditionally been a lot of competition online, and our experience is that competition brings about great things for users. We’re interested to learn more about the deal.

Ballmer at today’s press conference sees it differently:

Now, you know, obstacles, I don’t know, we think we have a good case on how this improves competition in the market. It’s good for consumers, the advertiser and the publisher. And obviously we’ll be called upon to present that case in D.C. and Brussels and other places. But it’s been looked at extensively by counsel both at Microsoft and at Yahoo!, and I don’t know if Brad Smith or Mike Callahan, the GCs, want to add on to that, the view of the regulatory.

And he expects that opposition to be lead by Google, though apparently he is unable to say Google’s actual name unless Walt Mossberg works magic upon his mind. He just kept saying “competition” today:

We’ll certainly face — we suspect we’ll face some opposition from the competitor [GOOGLE] — I would say competitors but it’s really the competitor who may not like more competition, because we actually think this is one of these cases where us coming together will actually provide more effective competition to the market leader, not less. So, certainly we would expect the competitor to be aggressive.

Can Yahoo succeed without search?

Told you I’d get back to this. Portals like AOL and Lycos that gave up their own search technology haven’t, and that’s worrisome. My A Search Eulogy For Yahoo post touches on this. Larry Dignan over at ZDNet has a nice article that goes into more depth on the comparison of what happened to AOL versus what could happen to Yahoo.

Of course, being focused might indeed help Yahoo as Bartz argues. As Quentin Hardy at Forbes puts it:

The stock may be falling Wednesday, but that doesn’t mean Bartz is unhappy. With a relatively swift move, she has defined, internally and to the world, what Yahoo! will be in the future. That’s more than we’ve seen from the company in years.

In particular, Yahoo has a number of leading web properties. It faces competition in some of these areas against both Microsoft and Google, but it has a good lead. Focusing on these might help. As Jared Newman at VentureBeat writes:

The blogosphere may guffaw at Yahoo’s abandonment of search, but maybe the company has a point about focusing more on its content portals. We all know display ads are in a rut right now, but that will change. And if Yahoo can innovate and figure out ways to make display ads more valuable to its clients, it’s already sitting on a goldmine of eyeballs. For a cash-starved company that, let’s face it, had very little chance of beating Google, dropping the dead weight of search isn’t a horrible idea.

Will this kill Google?

No. Google has a huge lead not just in marketshare but also in search technology over both Yahoo and Microsoft. This isn’t 1+1=2, beating the 1 of Google. The two together make it easier for advertisers to reach a common audience, but that’s the main benefit. Neither alone has a Google killer offering, and combined doesn’t just magically make that happen. For more background, see my State Of Search: Google Will Stay Strong Despite Bing & Yahoo article.

Resources: http://searchengineland.com/microsoft-yahoo-search-deal-simplified-23299