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Three reasons why Yahoo should not partner with Google - An advertiser's perspective

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If you cannot face an enemy, become his ally. That's exactly what Yahoo is trying to do. If the recent rumours are to be believed, Yahoo might give up its paid search advertising to partner with Google to do it for them. It is a deja vu of sorts for Yahoo who had snapped their partnership with Google years back to start their own search engine.

Why's Yahoo doing this?
In fact, this is one of the cleverer decisions from Yahoo's point of view. Adwords IS the most dominant of online advertising programs and YPN has always come way behind Adwords in competition. This step will help Yahoo boost up its numbers. Let me take hypothetical numbers to explain this: Suppose I need to advertise on both Adwords and YPN. Because Adwords is huge, and I also have more people bidding on my keyword here, I might be bidding at $10 for my keyword, while at YPN, due to lesser competition, I might only pay $5. So, simplifying the calculations, Yahoo might make only $5 at the max from this advertising.

Now, Yahoo is a huge site by itself. So, Google shall give Yahoo a much better deal than it would to any other Adsense partner. So, now with Google ads on Yahoo, Yahoo might just make $6 or $7 from the earlier $5. It is a better deal considering they are also not taking care of the ads inventory and the related cost now.

Why it's going to affect me?

1. Google Monopoly
Google is already a clear market leader in this segment. Now with Yahoo partnering Google, it shall move into a much higher reach. As an advertiser, I might just not find the right variety of options to choose. Google still has competition, but then this partership will always mean more dominance.

2. Possible Ad-Price increase
For a moment, let us assume the advertisers at YPN to be mutually exclusive to their Adwords counterparts. With this partnership in place, the YPN advertisers have to move to one of the other existing options. If not Google, they will be moving to others like Microsoft adCenter. Eitherways, peer-competitios is going to increase amongst advertisers on each of these ad networks. Since in all these networks, pricing is based on bids, increasing competition means more pressure towards a price increase. Definitely not something I would want.

3. Potential increase in partnerships for Google
Point 2 suggests that Google could actually be increasing its profit margin per click with this partnership in place. This also means as an Adsense publisher, I might stand to get more earnings per click. That stands not just for ordinary publishers, but to the other big websites too. Probably Digg might get back to Google now!. This shall give more dominance to Google, which might shoot the prices further.

As you see, it is clearly going to create many more partnerships in Google's favour. As I see now, it is going to be a nice thing to happen for an Adsense publisher. But if you want to advertise, it is going to be all the more harder!


Google "Smartads" on Mobiles?

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Last week, Nokia announced that they were acquiring the multimedia sharing website Twango. Twango is a website where you may share all the pictures, videos, audios from your cellphones or digital cameras with your family and friends through a blog, website or a discussion forum. This was probably for the first time that a Mobile handset maker had laid hands on a Web 2.0 company. In fact, Nokia had supposedly had a look at 70 probably candidates before rounding upon Twango. Well, this is just the flavor of the season as many big companies have started expanding their customer reach by taking to 3G for the next level of revenue growth.

Now, the news is just coming out from WSJ that Google is courting Mobile handset makers for a GPhone. This handset will help Google push mobile users to use Google apps on their phones and also set a platform for serving more and more ads to mobile users.

Smartads for Mobile phones?

Yahoo introduced the patent-pending Smartads as the way to provide the most personalized ads to a customer. This was based on his activities on the different microsites of Yahoo. Now, with GPhone, Google can really be taking the alternative route for personalization. This is because Google has already patented a technology that provides local search on mobile phones based on GPS-based technology.

With internet on mobile becoming more pervasive, Google's marketing strategy would revolve around pushing the customer to use mobile technology for localized searches (say the restaurants, beauty parlor, etc) and the web for more globalized searches. This would really give Google an upper hand against Yahoo and the other traditional rivals.

So, is Google moving out of web to counter Yahoo? No. Google is still the leader when it comes to search on the web. It might not be very long before Google introduces a technology to counter the Smartads. But, with mobile phones still being a largely untapped market, the future leadership might just be on the side of the company that makes early inroads here.


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