Yahoo, Bing Race to Meet Deadline for Joint Search Engine Venture

Good story about the Yahoo and Bing merger and how they are rushing to try and meet the fall deadline.  Very soon the results at Yahoo will change and Bing will be providing the search results to YAHOO, SO its a good idea to get your legal website ranked well at Bing because it will then carry over to Yahoo and you should see an increase in traffic.

Just two years ago, Yahoo spent $79 million to rebuff a hostile takeover from Microsoft and preserve its independence. Now, a big part of Yahoo’s future prosperity depends on how well it can join arms with Microsoft on a high-risk, high-reward technical project.

Yahoo and Microsoft are racing to meet a fall deadline for launching their joint venture to collaborate on Internet search, an effort by the former rivals to try to narrow the gap with their much stronger, common foe: Google.

The effort — including the retraining of hundreds of Yahoo salespeople to sell ads for both companies, and a conga line of about 400 engineers who are relocating from Yahoo to Microsoft offices in Silicon Valley; Bangalore, India; Burbank; and Redmond, Wash. — needs to be complete by mid-October if the two companies hope to have the show up and running before the start of the holiday season, the critical make-or-break period for advertisers and publishers.

At stake in the joint venture, Yahoo executives say, is the company’s ability to become an innovative force in search again — something Yahoo acknowledges it can no longer afford without its partnership with Microsoft’s Bing search engine. The 10-year partnership has Bing providing the underlying results of Yahoo searches, with Yahoo retaining control of how those results are displayed.

But outside observers say more than just Yahoo’s reputation in search is at stake. Considering the revenue and traffic represented by Yahoo’s 3.1 billion U.S. monthly search queries, the search partnership represents a critical gamble by new CEO Carol Bartz to grab a bigger piece of the search revenue pie. During the first half of 2010 compared with last year, Yahoo’s search ad revenue declined by 11 percent, or $84 million, to $674 million, even as the economy improved. Both Bartz and Microsoft CEO Steve Ballmer have made the search transition a top priority for both companies, executives say.

“Really, there is a tremendous amount at stake here for both players,” said Laxmi Poruri, an analyst with Primary Global Research. “There are search engine advertisers out there who are eager for this. They want to spend more money on Yahoo and Bing. The problem is these guys (individually) aren’t getting enough traffic for them.”

If the companies miss the mid-October deadline, they say they will be forced to delay the switch in the United States and Canada until 2011, sacrificing the lucrative holiday advertising season. But Poruri said Yahoo also is under pressure in the long run to continue to generate search traffic for Bing. “If the technology is a disappointment or the traffic acquisition is a disappointment, then Microsoft will go somewhere else to get that traffic,” Poruri said.

Both Microsoft and Yahoo executives say the switch-over is going as well as could be expected, and Yahoo says that all of its search traffic, apart from paid search, could be powered by Bing as soon as the end of August. Still, Mark Morrissey, the Yahoo senior vice president in charge of the company’s transition team, said engineers are sometimes pulling 48- to 72-hour stints to hit key milestones.

“I can tell you, far and away, this is the most complex logistical and technical thing I have ever been a part of,” said Morrissey, who also handled Yahoo’s switch to new systems for its paid search ads and display ads.

“All our day jobs are really that at this point,” said Satya Nadella, senior vice president of Microsoft’s Online Services Division.

The Yahoo-Microsoft alliance represents an unprecedented effort by two former competitors to join forces, but it has become increasingly necessary because of Google’s dominance. Google now provides about two-thirds of U.S. Internet searches, and an even higher share in many other countries.

Under the collaboration, Yahoo receives 88 percent of the revenue from searches done on Yahoo sites in the first five years, while saving the heavy costs of the computer infrastructure needed to crawl, index and rank the Internet. Microsoft receives the still-significant search traffic flowing through Yahoo. That is valuable because the more queries a search engine processes, the more relevant its answers, and the more extensive variety of keywords it can sell to advertisers.

Microsoft’s costs for Bing have been huge. Its online services division, which includes Bing and MSN, reported a $2.36 billion loss in fiscal 2010. Meanwhile, Bing gained 4.7 percentage points in market share in its first year, to 12.7 percent of U.S. searches, according to comScore.

Yahoo says its long-term ability to build innovative search products hinges on the collaboration.

“It’s not about the transition,” Morrissey said. “It’s about the future of search, and where we want to go.”

With Yahoo’s share of U.S. searches dipping below 20 percent in recent years, few see Yahoo as a search leader anymore. But Shashi Seth, Yahoo’s new chief of search, says that is about to change. Seth says the collaboration with Microsoft will give Yahoo the resources to develop new kinds of search products that could mimic the serendipity of browsing a newspaper, a sense of surprise and discovery rarely found in the blue hyperlinks of a conventional search query.

One example, Seth says, are Yahoo’s plans to begin offering the “Trending Now” box on its home page to other websites, probably in the next two or three months. Yahoo updates the Trending Now box every few hours based on an analysis of its search traffic, but the featured topics are tailored to users based on geographic location and Web history, so different users see different trending topics.

“The goal is to get users to discover things that they never would have thought about,” said Seth, a former Google executive who arrived at Yahoo in February. “It’s a completely new kind of search experience, one where the user didn’t ask for anything.”

Others are also racing to offer new ways for people to search. Facebook and recently introduced new “social search” features that allow users to ask questions of actual people, rather than just query a computer algorithm.

“We think as the social web continues to explode, this is only going to get bigger and bigger,” said Scott Garell, president of Oakland-based Ask Networks.

Some at Yahoo have been frustrated with the more centralized and hierarchical management structure at Microsoft. But despite their history as hostile competitors — Yahoo disclosed that it spent $79 million in 2008 on lawyers and “outside advisers” to respond to Microsoft’s unsolicited takeover bid — executives say the main challenge is the technical difficulty of the project.

“We’re mutually codependent,” Morrissey said, “on each other’s success.”


1 thought on “Yahoo, Bing Race to Meet Deadline for Joint Search Engine Venture”

  1. Malik Mcclimans

    Pay per Click or PPC is a system of advertising on the Internet whereby the advertisers only pay for their advertisements when an Internet user actually clicks on their Ad. By bidding on certain keywords, you can have your Ad appear when those keywords are used in an internet search.

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