After over a year and a half of negotiation both Microsoft and Yahoo have finally come to a deal which is set to challenge Google’s 65% share of the online search.

Under the terms of the new 10 year deal, searched on Yahoo.com will be powered by Microsoft ‘s brand new search engine Bing and Yahoo will be responsible for attracting and selling premium advertising.

Microsoft is set to pay Yahoo 88% of the revenue it gains from searches on the Yahoo website and Microsoft will also have the rights to integrate Yahoo search Technology into its existing search platform. Yahoo is reported to have said that the new agreement will generate the company an annual income of over $500 million.

Microsoft Chief Executive Steve Ballmer said that the deal will allow Microsoft to “create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company.”

In a joint statement from Microsoft and Yahoo, it was said that “advertisers no longer have to rely on one company that dominates more than 70% of all search.” This was obviously an attack on Google’s dominance in the marketplace.

Article by Creative SEO

According to a new report by Chikita, Bing users are over 50% more likely to click on an advertisement on a third party website than both Google and Yahoo generated users. According to Chikita the click rate averages are as follows:

Google: 0.97%

Yahoo: 1.24%

Bing: 1.5%

It looks as though Bing has made some good gains since its launch at the end of May. Although growth has been good and Bing has made up some ground on its competitors it is unlikely to directly affect the existing search marketplace. Microsoft still need to strike a deal with Yahoo to broaden the Companies advertising reach and start to make an impact on Google’s monumental popularity. AdAge is reporting that that a deal between both Microsoft and Yahoo is due to be released anytime this week. The article mentions that the payment structure has been the main issue preventing the deal from going forward. Yahoo has requested a revenue share rather than upfront payments and revenue guarantees.

“Execs in Redmond never conceived of the deal as an upfront purchase of Yahoo’s search traffic but as a deal in which Yahoo would be compensated from a share of revenue from the sale of search ads. Yahoo would be allowed to sell search ads on Bing.com as well as its own site, giving it more search inventory to sell and making it a bigger player in the search sales front. It would also immediately be able to save millions by not having to maintain its own search infrastructure.

The latest terms of the deal underscore Microsoft’s devotion to developing and owning technology vs. selling media. The deal won’t make it a bigger seller of online advertising but it would allow it to eliminate a search-technology competitor in Yahoo and consolidate roughly 30% of the search marketplace on its own platform — a large enough share, CEO Steve Ballmer seems to believe, to dent Google’s dominance”

If the article at AdAge is correct then Yahoo would still be able to sell search and display to its existing advertisers. Let’s hope the article is correct and deal is announced this week.

Article by Creative SEO UK