New study shows Microsoft’s Yahoo!-Bing Search Alliance is paying off

By Tom Warren, on 26th Jan 11 7:45 pm with 2 Comments

A new study released on Monday shows that Microsoft’s Yahoo!-Bing Search Alliance is paying off.

Marin Software, a paid search marketing platform provider, and Razorfish, an interactive marketing and technology company, today unveiled the results of an exclusive study conducted to analyze the impact of the Search Alliance on paid search campaign performance. The results make for encouraging reading if you’re Microsoft. Marin’s key findings are:

  • Post transition, the Search Alliance is gaining ground on Google. Specifically, the Search Alliance increased its share of paid search impressions by 4% and its share of clicks by 2%, while Google’s share was reduced by the same percentage.
  • The Search Alliance has resulted in improved traffic quality for advertisers, as evidenced by higher conversion rates. Excluding the impact of seasonality, conversion rates for the Search Alliance increased by 12% during the study period.
  • Increased conversion rates and lower costs-per-click delivered improved return on advertising spend (ROAS) following the transition. Costs-per-click (CPC) for the Search Alliance ended the year 20% below industry benchmarks, resulting in significantly lower cost-per-acquisition for advertisers.
  • In addition to benefiting advertisers, the Search Alliance also has considerable upside potential for both Yahoo! and Microsoft. As of December 2010, the Search Alliance was delivering 21% of paid search clicks, but only capturing 18% of the corresponding ad spend in the North American market. As advertisers migrate to the new combined platform and the unified marketplace becomes more efficient, the Search Alliance has the potential to capture an additional 3% in advertising spend share – amounting to hundreds of millions in incremental media dollars.
  • Microsoft and Yahoo signed a 10 year agreement in June 2009 to make Microsoft’s Bing search engine the exclusive algorithmic search and paid search platform for Yahoo sites. The agreement ended Microsoft’s talks with Yahoo, which lasted nearly two years. During the talks Microsoft evaluated a takeover bid, and nearly miss out on a deal when Yahoo attempted to partner with Google. The Yahoo-Google partnership failed due to regulatory concerns. Today’s survey results will encourage investors eager to hear Microsoft’s Q2 2011 results tomorrow evening. Microsoft is expected to announce mild earnings tomorrow evening due to a slowdown in PC shipments during the recent quarter.

    Yahoo-Bing Payoff Research Brief

    • Anonymous

      Unless a miracle happens at Yahoo, it sounds like MS pulled off a pretty good deal. I imagine in 10 years time Yahoo will probably be pretty irrelevant and MS was able to acquire their traffic and partner on some technology and not have to swallow the obvious sinking ship. Without any drastic new services/technologies/features i’m not sure how long Yahoo can just ride out their current profits without continually reducing staff and operating costs to inflate their earnings..

      • JohnCz

        Miracle won’t be needed, Yahoo needs to stay on track with their plans to expand their content portfolio and distribution in more markets…all of which will benefit their display advertising.