Nothing is better for you and me than serious competition for our ad
dollars. I would love for Yahoo Search Marketing to be a formidable
opponent to Google but I don't think it's possible. Microsoft and Yahoo
becoming one will likely not achieve anything other than they'll just
argue with each other about how to mis-spell everything.
Google had no plan whatsoever to start an independent company but
they were more or less forced to do it since no of the major search
engines where interested in taking on their ideas. Relativley speaking
the guys had to work on a shoe string budget and were forced to build a
technology platform that was very cheap. They didn't have oracle
databases or expensive servers and all that, they had to go to the spare
part room to put togther whatever they could find and work from there.
In contrast, Yahoo spent millions trying to come up with something new
and yet their pay-per-click system is yet the most pathetic thing I have
ever seen. And I am being kind.
Don't get me wrong here, I am a bit Google paranoid myself and I
don't like to put all my eggs in one basket but I really wish that Yahoo
and their eqvivalents could come up with something worth the while,
something simple to use.
My point is that Google had to work with very limited resources and
Yahoo and Microsoft has all theses assets and they cant even get out of
their own way. At the end of the day it is the quality of the business
idea and the quality of the commitment that makes the difference. It is
not about how much money you have; you can start off with very limited
resources and become number one, Google is the living proof of that.
Yahoo has a system that auctions keywords to the max bidder while
Google's system is based on maximum revenue per 1000 impressions. So if
you take Googles click-through rate formula your position is your bid
price times your click-through rate. That way you get a cost per
impression. Google make money on the advertisers that makes them the
most money per search. That translates to something like 30-40%
improvement in revenue per search over what Yahoo gets.
In other words Yahoo is loosing money in every single search and of
course those who syndicate yahoo ads on their website make less money on
every impression too. Then the advertisers make less money which makes
them be less interested in using Yahoo services for promoting and that
causes a downwards spiral.
If we flip it around the other way you have all the Google Adword
users who are split testing and scratching looser ads, try to beat their
winner ads and peel out keywords that aren't doing too well and insert
and regroup keyword that are doing well. Everytime they do that they are
doing a win-win-win and it's an upwards spiral where things get better
and better. So by every passing month of improvements like this it will
get easier for people to find what they are looking for.
Google never made any big mistakes really, sure there were some
miscalculations with Froogle and some other projects but overall they
have done everything right and now they are unstoppable. The mistakes
Yahoo and Microsoft has made in the past are numerous. I seriously think
the two giants working together is another big mistake but I hope I am
wrong.
