JumpFly Blog: AdWords, Yahoo & Microsoft Advertising

Jerry Yang, who co-founded Yahoo in 1995, is stepping down after 17 challenging months as CEO. Yang, 40, will remain CEO until his replacement is hired and then revert to his previous advisory role of “Chief Yahoo.”

Failed Microsoft Buyout

Things became particularly interesting for Yang about six months back, when Microsoft attempted an unsolicited buyout for roughly $33 per share, which was a generous premium to Yahoo’s $19 stock price at that time.  Unfortunately for Yahoo shareholders, at least in the short term, Yang vocally resisted this opportunity and took measures to ensure that it would not come to be. Today, Yahoo’s stock price sits under $9 per share just six months later, the lowest level since 2003.

Microsoft might come back to the table, but just yesterday Steve Ballmer said, “We’ve moved on,” during a shareholder meeting in Bellevue, Washington. He reiterated that a partnership between Microsoft and Yahoo in the Internet-search market is “an interesting possibility.” However, Ballmer added that there are no talks about such a partnership at this time.

Google Backs Out of Partnership

Some are speculating that the final blow to Yang recently came from Google, who backed out of a proposed ad partnership to avoid a potential anti-trust battle with the Justice Department.

YouTube Surpasses Yahoo

Earlier this week, Comscore data revealed that YouTube surpassed Yahoo as the second most popular search service, receiving 2.6 billion search queries in August, 2008 compared to Yahoo’s 2.4 billion queries. The rapidly growing online video marketplace represents yet another area that Google dominates.

In a memo emailed to Yahoo employees Monday announcing his resignation, Yang wrote, “All of you know that I have always, and will always bleed purple. I will always do what I think is right for this great company. While this step will be an adjustment for all of us, I know it’s the right one.”

Yahoo needs to do something in order to prevent their one time search engine dominance from deteriorating into obscurity. Yahoo still boasts 500 million users worldwide, but increasingly every month, more and more are turning to Google for their search needs.

More about Brad

Honestly, I don’t understand why every single company or person trying to sell a product or service is not doing pay-per-click (PPC) advertising. Sure, you can run a newspaper ad and just hope the right person reads it at just the right time when they are looking for your product or service. Sure, you can run a TV campaign and again hope that people who might be interested in your product or service are actually watching TV at just the right time when you run the ad. Sure, you can throw up a billboard on the highway and hope that just the right drivers are seeing your advertisement just when they need your product or service. You can even throw up flashing billboard displays on thousands of websites and hope that just the right customer base is searching the web at just the right time when they are in need of, or desire, your product or service.

Or you can run a PPC campaign with Google AdWords, or Yahoo Search Marketing, or MSN AdCenter, and show your ads to precisely those people who are already looking for your product or service! Obviously, there are other reasons why you wan to run newspaper ads or television campaigns, but PPC advertising really should be a part of your marketing efforts. Yes, there is an expense involved, but that’s true of any type of advertising, and I’m hard-pressed to find any other type of advertising that is more directly focused on the exact type of customer you want for a business. By putting a keyord term or search phrase into a search box, these folks are looking for you so you should be doing whatever you can to help them find you — and that means running an online pay per click campaign.

Of course, at JumpFly we have a vested interest in pay-per-click advertising because our business is to help others manage their ppc campaigns, but we also run our own PPC campaigns because we believe in the value of it and we have seen excellent new partnerships and clients result directly from our own use of pay-per-click marketing. We’re always looking for new customers, too. If you’ve been hesitant or unsure about using pay per click marketing for your business, I encourage you go give it a try. Even if you don’t want or need JumpFly’s services, we have seen such incredible results with other business owners that I encourage you to at least give it a try. Your holiday sales figures might turn out much better than you hoped for if you do.

Learn more about Jack

A blog entry released earlier today (view here) by David Drummond, Senior Vice President and Chief Legal Officer with Google, publicly announced Google’s decision to walk away from a planned partnership with Yahoo! (view details about the agreement here). This is not a huge surprise, as the deal was recently delayed, but it is now official.

The blog states, “… after four months of review, including discussions of various possible changes to the agreement, it’s clear that government regulators and some advertisers continue to have concerns about the agreement. Pressing ahead risked not only a protracted legal battle but also damage to relationships with valued partners. That wouldn’t have been in the long-term interests of Google or our users, so we have decided to end the agreement.”

In response, Yahoo! said it was disappointed by Google’s decision and maintained that the abandoned partnership would have been beneficial for everyone. Yahoo! just lost out on hundreds of millions of dollars in additional annual revenue that would have resulted from the deal. Yahoo!’s statement also said that they are, “disappointed that Google has elected to withdraw from the agreement rather than defend it in court.”

Several analysts speculate that losing the Google deal will make Yahoo! more likely to revisit a possible deal with, or outright buyout from Microsoft. Details of the Google-Yahoo! partnership put up significant barriers to a Microsoft buyout - barriers that no longer remain. Yahoo!’s stock price finished up today despite the DOW plunging 486 points, likely due to investor speculation and hopes for renewed buyout potential. We’ll see how this plays out, but I’m confident that Microsoft execs are talking about this situation as I type. Tic toc. Tic toc. Time will tell if Microsoft will come back to the table. In the meantime, Google continues to expand their search dominance.

Learn about Brad