My last blog discussed why a Yahoo/MSN merger would be bad for our clients.  Well, the glass just became less full.  The proposed partnership with Google poses even greater problems for our clients.  Here is what is happening:  Yahoo will reserve the right to display a Google bidder on their search engine at their sole discretion.  So, if you search Chicago Real Estate on Yahoo, the ads served may be from someone who bid on Google.  Whom will Yahoo serve?  Well, obviously the advertiser who pays the most.  Since Google has deeper penetration, more competition and higher prices (see my last blog), then you guessed it, the price per click will go up, for the same traffic.  Yuck!  So, LeadQual has to manage Yahoo’s back-end, Google’s back-end and MSN’s back-end.  But, Yahoo can display whoever pays the most, even if they bid on Google’s engine.  But because it is at Yahoo’s discretion, it’s not like you can rely on your ads being displayed on Yahoo unless you bid on Yahoo.  Remember, the bid price on Google has to be high enough to cover the revenue share Google is going to take, so if you bid the same on Google as Yahoo, your Yahoo bid should trump.

So, where is the silver lining?  I quite honestly don’t see one.  My only hope is that the regulators recognize that this is a clear use of monopolistic pricing power.

Andrew Coleman

Co-Founder – LeadQual.com