The battle lines were drawn when Yahoo! ended its reliance on Google for search technology. Now, Yahoo! executives are making it clear that they see Google as the one to beat.
Yahoo! and Google are in a high-stakes battle for advertising revenue, moving in from opposite poles of the Web. Yahoo!’s revenue roots are in the media world: selling all sorts of ads, along with sponsorships, featured placements, buttons and links on a CPM or flat-rate basis. When Yahoo! acquired pay-per-click search engine Overture Services in October, it moved in on Google’s territory.
At its Analyst Day, the company explained how it’s working to integrate search into every aspect of its content-rich, even cluttered, portal.
Jeff Weiner, SVP, Search & Marketplace, told analysts that search engines’ actual algorithmic search results, so-called natural search, aren’t much different; Yahoo! will compete by continuing to integrate content from its other properties, a strategy Weiner called “delivering the means and the end.” For example, if someone searched for “San Francisco weather,” results would include a list of links where the searcher could find that info — the means — as well as the actual information from Yahoo! Weather — the end.
The company also is inserting search into its other content and services; for example, the next version of Yahoo! Messenger will let people search from within the chat window. And, in a deal announced today, Yahoo! Search will be featured in the upcoming new version of Plaxo Contacts software.
Weiner said the company’s competitive advantages include registered user relationships and depth of content. “Take any one of our other properties; if we can deliver a killer app in any of those categories, they will come. Once they’re there, I don’t think it’s a leap that they’ll start using Web search. That’s our competitive advantage.”
Google points to the purity of its search results, in which algorithms determine what comes up on top and ads are clearly marked as such. Yahoo! Search mixes paid and natural search results. Ted Meisel, president of Overture and Yahoo! senior vice president, said that charging higher prices for key words will improve the quality of results, because advertisers won’t bid unless they think there’s a good chance their ad will be relevant.
According to Meisel, Overture’s approach to paid search listings is to treat them as carefully as the natural search results, a message that will appeal to advertisers if not necessarily to searchers.
The company’s strategy has been to expand its advertising base from small businesses that pay for ads with a credit card to major online retailers and big direct response advertisers who market through multiple channels. Unlike Google’s self-service model, it also offers top advertisers the ability to pay a set price for predetermined placement.
“Advertisers need to know in advance how much they will spend and where it will appear,” he said. “Technology can do a lot, but it can’t do everything.”
Seeming to take another swipe at Google, Yahoo! chief sales officer Wenda Harris Millard said that one of the company’s key differentiators is that it’s focused on just two core businesses. “There’s no behemoth technology stuff that gets in our way,” she said.
Yahoo!’s media company roots have left it with a well-developed account management infrastructure that it’s started to bring to bear on search marketing. David Karnstedt, senior vice president and general manager of Overture’s direct business, explained that Overture has tiered services, with staff power focused on the top 20 percent of advertisers. Advertisers in the top tier, Diamond, get a dedicated account manager and custom technology services. In December, Overture rolled out Marketing Optimizer, a Web-based analytics tool for marketers similar to that offered by many third-party marketing optimization software vendors.
While Yahoo! marshals its weapons to wrest away a chunk of Google’s share of the paid search market, Google seems to be heading in Yahoo!’s direction. Behind Google’s stripped-down interface lie an array of new “in-beta” features that, if they ever surface on the front page, could make the search site look a lot more Yahoo!-like. Google’s Gmail, launched in beta
in March, has a wrinkle Yahoo! doesn’t yet have: contextual ads within the body of the e-mail. The jury is still out on how advertisers and consumers like them, but a recent survey by Mosaic Media found that 57.1 percent of Google AdWords advertisers want their ads to appear contextually in Google’s Gmail, while only 30 percent said they’d pay the same cost-per-click.
Google also began testing an upgrade of its Groups Usenet-reading service that will let people create their own discussion lists — just like Yahoo! Groups. And it’s begun a test of allowing conventional graphical ads such as banners in the contextual ads it sends to third-party Web sites participating in its AdSense program.
While Google relies on word of mouth and third-party distribution for traffic, Yahoo! showcased another in its long line of television ad campaigns — featuring search. The “Life Engine” campaign stresses contrasts between people to illustrate the breadth of the offering. In one, two rappers seeking hip-hop music share a split screen with an old white guy “looking for other Republican party animals.”
