Thoughts on a Google/Yahoo Search Deal

TechCrunch posted the following article about Google serving ads against Yahoo search results. Everybody seems to have their own opinion about the pros and cons of such a deal. Microsoft will obviously be pushing the Department of Justice to take a nice and steady look at possible monopolistic overtones to the deal.

Because of Google's mammoth ownership of the search advertising market, it's easy to see why anyone inside of Google or Yahoo would be in favor of it. Google is currently spinning the issue saying that the partnership will lower ad prices Really? How? It will essentially direct advertisers to a network that (after the deal is completed) will own upwards of 90% of the search advertising market, taking away competition, and by definition force the price of keywords and keyword phrases up.

The problem with not just search advertising but online ad networks as a whole is the lack of quality competitors in the space. Granted, there are now over 300 ad networks competing for a piece of the $16billion online ad market. The trouble is not one of them has shown the capability or the determination to produce a product capable of effectively competing with Google.

Unfortunately, a good product is only half the battle. Many companies out there have developed good ad networks, it's just that a) the management is under-prepared for a long fight with Google, b) the product they built can't scale, or c) the company lacks the discipline or the expertise to successfully execute putting another product in play with mainstream advertisers.