What History Tells Us About the Bing/Yahoo Agreement
April 2, 2015
In 479 BC, there was one particular battle that was important to the Greek’s victory in the Greco-Persian Wars. It was the Battle of Plataea. In this battle, two small political states joined together to fight the big bad Persian Empire. Sparta and Athens, though small alone, were able to beat the Persian army when they joined forces and fought together. Decades later, Athens and Sparta fought among themselves in their own famous war (Peloponnesian War, anyone?). However, they stood together when it was necessary and the Persians were invading.
Why the history lesson? There has been a lot of buzz lately about Yahoo and Bing’s search partner agreement. If you have already read Bri’s post, you know that Yahoo and Bing have just reached the halfway mark of their 10-year agreement. This means that Yahoo is permitted to reevaluate the terms after the first five years. Yahoo has been reportedly unhappy and negotiations have been extended another 30 days with the possibility to terminate or redesign the original agreement from 2009.
Obviously, the largest noise is being made about the idea of Yahoo breaking off the agreement with Bing.
To me, Yahoo and Bing are the Sparta and Athens of the Greco-Persian War. It’s 480 BC. They are losing the war and have experienced some costly defeats by the Persians. Bing and Yahoo are currently losing the search query war. In the past 5 years, their combined percentage share of search queries has remained constant around 30%. If their goal when the agreement was struck in 2009 was to increase their search share, they have made little ground.
However, it is too soon to give up and separate. Together, they have 32% of the search share in February 2015. These numbers are compared monthly in the comScore Search Share Report for desktop. Google is only up by 98% their combined total. When separated, those numbers obviously do not look as good. Google has 225% more of the search share than Bing and 403% more than Yahoo.
Despite these sad numbers, hope isn’t lost. Yahoo is growing its search shares, which might be contributing to the engine’s questioning of the worth of their search agreement with Bing. As we know, Yahoo became the default search engine for Mozilla Firefox in December 2014. Since that time, Yahoo has increased their search share from 10.1% in November 2014 to 12.8% in February 2015. As far as revamping their contract, Yahoo might have an argument, based on the early results of their growth from the partnership with Mozilla.
As the Greeks have demonstrated, Yahoo and Bing might have a chance if they do it together. In order to fight their Persia, they need a combined army.
If Yahoo decides to break things off with Bing, they must have something big – a secret weapon of sorts. While they have their own search platforms for mobile (Yahoo Gemini) and Yahoo Stream ads, 37% of their revenue at present comes from their search partnership with Bing. Without some alternative plan to make up their search ad revenue, they need Bing as much as Bing needs Yahoo. There have been some rumors about Yahoo creating a fully supported search platform, but no one seems to really know if Yahoo would be capable of that yet. To be sure, if Yahoo and Bing break up, Yahoo will have some big things up their sleeves.
Based on what I know, it seems straightforward that Yahoo and Bing should remain on good terms. However, to be fair, there are a lot of unknowns! Below are just some of the items that we do not have access to:
- The actual terms of the original agreement
- The search revenue that results from the partnerships for Yahoo properties. This amount is supposed to be a percentage of Google’s 12-month trailing average and if lower, it is the only grounds to terminate the agreement.
- Does Yahoo have a better alternative to replace that revenue?
- The actual data behind paid search performance numbers – where do our desktop conversions come from? Yahoo or Bing?
Without the information for these questions, I see no reason for Bing and Yahoo to completely terminate their contract. More importantly, I do not see a reason that it will benefit me or paid search in general. Ultimately, that is what should be most important to us. How will this affect my paid search performance? We are all depending on each of our platforms to pull their share each month in order to reach our goals. If platforms change and impact performance, the adjustment could bring in great results, but there is a chance that the opposite could occur.
Until I have a better idea what might be on the other side of this, I have yet to be sold to the idea. We live in a world of data and that’s what I want if changes are to come. I want to know how a termination of the agreement or a redesigned agreement will impact my paid search performance.
In their 30-day extension, I believe the negotiations will more likely yield an adjusted contract. To the terms of the adjusted contract, I have no idea. My only assumption is that Yahoo wants more control than they are getting now.
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